Question

What is the fixed cost?

1) The cost of producing a product that does not change with the level of production
2) The cost of producing a product that changes with the level of production
3) The cost of producing a product that is fixed for a certain period of time
4) The cost of producing a product that is variable for a certain period of time

Answer 1

Fixed costs are the costs of the fixed inputs that do not change regardless of the level of production. Examples include rent, machinery, equipment, research and development, and advertising.

Step-by-step explanation:

Fixed costs are the costs of the fixed inputs (e.g., capital) that do not change regardless of the level of production. One example of a fixed cost is the rent for a factory or a retail space, which remains the same regardless of how much is produced. Fixed costs can take many other forms, such as the cost of machinery, equipment, research and development, or advertising. The amount of fixed costs varies depending on the specific line of business.