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As production volume increases, the marginal cost a manufactured good usually decreases. What is the reason for this?
  1. The fixed cost is spread over more units.
  2. The factory becomes more efficient.
  3. New workers will accept lower wages.
  4. To account for reduced marginal utility
Explanation
Answer: A - Fixed costs, such as rent and machinery, are spread out over a greater number of units as production volume increases. If fixed costs are spread out over 1001 goods, it costs less per good than if they are spread over 1000 goods.
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