Which of the following is true of a firm's fixed costs?
A) A firm should shut down if it cannot cover its fixed costs.
B) Fixed costs are incurred regardless of the firm's level of output.
C) Fixed costs are the same as a firm's total costs.
D) Fixed costs are reduced to zero if the firm produces no output.
E) Accounting profit equals economic profit when fixed costs fall to zero.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with the level of output, meaning they must be paid regardless of whether the firm produces any output or not. Therefore, option B is correct. Options A, C, D, and E are incorrect.

Which of the Following Is True of a Firm's Fixed