Fixed cost is
A)the cost of producing one more unit of capital, for example, machinery.
B)any cost that does not change when the firm changes its output.
C)average cost multiplied by the firm's output.
D)usually zero in the short run.

Question

Quizplus · Accepted Answer

Fixed cost is defined as any cost that does not change when the firm changes its output. This means that whether a company produces one unit or one thousand units, the fixed cost remains the same. Examples of fixed costs include rent, salaries of permanent employees, and insurance. These costs are incurred regardless of the level of production or sales.

Fixed Cost Is