In the short run, fixed costs for a profitable competitive firm are
A)zero.
B)negative.
C)important determinants of the output level.
D)irrelevant in determining the optimal level of output.

Question

Quizplus · Accepted Answer

In the short run, fixed costs do not vary with the level of output and thus do not affect the decision of how much to produce. The firm's decisions on output are based on variable costs and revenue, making fixed costs irrelevant for determining the optimal level of output.

In the Short Run, Fixed Costs for a Profitable Competitive