Fixed costs are considered variable costs over the long run because as the scale of production or the scope of operations changes significantly, what was once a fixed cost can become variable. For example, a factory's rent is fixed in the short term, but if production scales up significantly, a larger facility might be needed, making the previously fixed cost variable in the long run.

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Fixed Costs

Question 153

Multiple Choice

Fixed costs:

A) reduce the risk of loss
B) are considered variable costs over the long run
C) are graphed as a steeply sloped line
D) provide less operating leverage

Correct Answer: