A fixed cost is:
A)the cost of any input whose per-unit price has been fixed, whether by long-term contract or by some similar means.
B)a cost whose increases are exactly proportional to increases in output.
C)any component included in average cost which enters in AC as the same fixed per-unit amount, no matter what the level of plant output may be.
D)a cost which the firm would incur even if its output were zero.
E)none of the above.

Question

Quizplus · Accepted Answer

A fixed cost is a cost that remains constant regardless of the level of production. It is a cost that the company must incur even if it produces nothing. Therefore, option D is the correct answer. Option A refers to a fixed input cost, option B refers to a variable cost, and option C is discussing average cost, not fixed cost.

A Fixed Cost Is