Which of the following are correct about fixed costs?
(i) They do not change with the level of production in the short run.
(ii) They include variable costs.
(iii) They are present even when the firm is producing zero units.
(iv) They are irrelevant to marginal cost.

Question

Quizplus · Accepted Answer

(i) is true, as fixed costs are independent of the level of production in the short run.
(ii) is false, as fixed costs refer to the costs that do not change with the level of production, therefore they are different from variable costs.
(iii) is true, as fixed costs are the costs incurred even when the firm is producing no units.
(iv) is false, as fixed costs are relevant to marginal cost calculation since they are included in the calculation of total cost.

Which of the Following Are Correct About Fixed Costs