The rent for Oscar's sporting goods store is $2,500 per month.Oscar pays his staff $9 per hour,and his monthly electricity bill averages $700,depending on his total hours of operation.Oscar's fixed costs of production equal:
A)$2,500 per month.
B)$3,200 per month.
C)$9 per hour multiplied by total hours of work plus $700.
D)$9 per hour multiplied by total hours of work plus $3,200.

Question

Quizplus · Accepted Answer

Fixed costs are those that do not change with the level of production. In this case, the rent and the electricity bill are fixed costs. The cost of labor is not a fixed cost because it will vary with the number of hours worked. Therefore, the fixed costs of production are $2,500 per month (rent) + $700 per month (electricity) = $3,200 per month.

The Rent for Oscar's Sporting Goods Store Is $2,500 Per