A ______ cost is ______ if the firm incurs the cost even 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 output and must be paid even if no output is produced. A sunk cost is a cost that has already been incurred and cannot be recovered. Therefore, a fixed cost is sunk because it must be paid regardless of whether any output is produced.

A ______ Cost Is ______ If the Firm Incurs the Cost

A Cost Is If the Firm Incurs the Cost