Fixed cost is:

Question

Fixed cost is:

Quizplus · Accepted Answer

Fixed cost is a cost that does not change with the change in the production level or output. It is an essential cost that has to be borne by the firm regardless of how much it produces. Examples of fixed costs include rent, insurance premiums, and salaries of managerial staff. Option A is incorrect as the cost of producing one more unit of capital is called the marginal cost of capital, not fixed cost. Option C is incorrect as the product of average cost and the quantity produced gives total cost, not fixed cost. Option D is incorrect as fixed costs can never be zero in the short run.

Fixed Cost Is