If a firm produces nothing, which of the following costs will be zero?
A)Total cost
B)Fixed cost
C)Opportunity cost
D)Variable cost

Question

Quizplus · Accepted Answer

Variable costs change with the level of output. If a firm produces nothing, its variable costs, such as raw materials and direct labor, will be zero. Fixed costs, such as rent and salaries, still accrue regardless of production levels. Total cost includes both fixed and variable costs, so it won't be zero. Opportunity cost, the cost of the next best alternative foregone, is not directly related to production levels and thus won't be zero simply because production is zero.

If a Firm Produces Nothing, Which of the Following Costs