(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Suppose Bonnie spends $300 per month to rent the building,$100 per month on insurance,and $100 per worker per month.Given this information,Bonnie's monthly fixed costs equal:
A)$400.
B)$300.
C)$500.
D)$100.

Question

(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.Suppose Bonnie spends $300 per month to rent the building,$100 per month on insurance,and $100 per worker per month.Given this information,Bonnie's monthly fixed costs equal: 
A)$400. 
B)$300. 
C)$500. 
D)$100.

Quizplus · Accepted Answer

Fixed costs are the costs that do not vary with the level of output. In this case, Bonnie has two types of fixed costs: rent and insurance. Thus, her monthly fixed costs would be $300 for rent plus $100 for insurance, which equals $400. The cost per worker is a variable cost, as it varies with the level of output.