Which of the following best describes total fixed cost?
A) Costs that do not vary as output varies.
B) Total cost divided by the quantity of output produced.
C) Total variable cost divided by the quantity of output produced.
D) Total fixed cost divided by the quantity of output produced.

Question

Quizplus · Accepted Answer

Total fixed cost refers to the costs that do not vary as the quantity of output changes. These costs remain constant in the short run regardless of how much or how little output is produced. Examples of fixed costs are rent, property taxes, insurance premiums, and salaries of permanent employees.

Which of the Following Best Describes Total Fixed Cost