Final answer:
A simple business principle is to always cover your fixed costs. Fixed costs are the costs that remain the same regardless of the level of production, such as rent on a factory or equipment costs.
Step-by-step explanation:
In a business, one simple principle is to always cover your fixed costs. Fixed costs are the costs that remain the same regardless of the level of production, such as rent on a factory or equipment costs.
The reason it is important to cover fixed costs is that they are necessary expenses that a business must pay, regardless of how much it produces. If a business fails to cover its fixed costs, it will not be able to make a profit.
For example, imagine a clothing store that pays a set amount of rent each month. Even if the store sells a lot of clothes or only a few, it still needs to cover the fixed cost of rent in order to stay in business.