Alicia spends $20,000 on remodeling a storefront that she then opens as a flower shop. Her business has not been very successful, and she needs an additional $8,000 to keep the flower shop. Which of the following is true?
A) The $20,000 Alicia spent on remodeling represents a part of the total variable cost of her business.
B) The $8,000 represents her marginal costs of production.
C) The $20,000 Alicia spent on remodeling is a fixed cost of her business.
D) The $8,000 Alicia needs to keep the flower shop open represents her total fixed costs.

Question

Quizplus · Accepted Answer

The $20,000 spent on remodeling is a one-time expense that does not change with the level of output or sales, making it a fixed cost.

Alicia Spends $20,000 on Remodeling a Storefront That She Then