A ______ cost is ______ if the firm doesn't incur the cost if it produces no output.
A) Fixed; sunk
B) Fixed; explicit
C) Variable; sunk
D) Fixed; avoidable

Question

Quizplus · Accepted Answer

A fixed cost is a cost that does not vary with the level of production output, and the firm cannot avoid paying for it even if it produces no output. However, if a fixed cost is avoidable, such as lease payments for equipment that the firm can sell or terminate the lease, it is a variable cost. Sunk costs are costs that have already been incurred and cannot be recovered, regardless of future decisions, and explicit costs are the actual payment made for a resource used by a firm.

A ______ Cost Is ______ If the Firm Doesn't Incur

A Cost Is If the Firm Doesn't Incur