A factory pays $96,000 per year to lease a production machine. The machine can produce up to 24,000 units per year. Production increases from 12,000 units to 16,000 units, with no change in the annual lease payment.

Which statement is correct?

Question

A factory pays $96,000 per year to lease a production machine. The machine can produce up to 24,000 units per year. Production increases from 12,000 units to 16,000 units, with no change in the annual lease payment.

Which statement is correct?

Accepted Answer

Lease cost per unit decreases from $8 to $6.

Answer

Lease cost per unit remains $8 because the lease is fixed.

Answer

Total lease cost increases because more units use the machine.

Answer

Total lease cost decreases by 25%.

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A factory pays $96,000 per year to lease a production machine. The machine can p...

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