A business can produce 1,000 units at a zero cost per unit with a total cost of $100,000. Production increases to 2,000 units at a zero cost per unit with a total cost of $100,000. What type of cost is the $100,000?

Question

Quizplus · Accepted Answer

The $100,000 cost does not change with the level of production (it remains the same whether 1,000 or 2,000 units are produced), indicating it is a fixed cost.

A Business Can Produce 1,000 Units at a Zero Cost