Fixed costs exist only in:
A) the long run.
B) capital-intensive markets.
C) the short run.
D) labor-intensive markets.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with the level of output, and are incurred regardless of whether a firm produces or not. These costs exist only in the short run, as in the long run all costs become variable. In capital-intensive markets, firms have high fixed costs due to their heavy dependence on physical assets, but this does not mean that fixed costs only exist in capital-intensive markets. Likewise, fixed costs can arise in labor-intensive markets as well.

Fixed Costs Exist Only In