Answer: Fixed Cost: Fixed costs are expenses that remain constant regardless of the level of production or output. These costs do not change as the production quantity changes. For example, the cost of renting a factory space or the salaries of certain administrative staff are fixed costs. They stay the same whether you produce one unit or a thousand units.
Average Fixed Cost: Average fixed cost is obtained by dividing the total fixed cost by the quantity of output. It represents the fixed cost per unit of output. As you produce more units, the total fixed cost remains constant, but the average fixed cost per unit decreases. This is because the fixed cost is spread over a larger number of units. Mathematically, Average Fixed Cost = Total Fixed Cost / Quantity of Output.
Step-by-step explanation: