Fixed costsa. are equal to explicit costs plus implicit costs. b. do not vary as output varies. c. are the same as total costs for any level of output greater than zero. d. are another name for sunk costs.

Question

Allan Farmer

Business

26 September, 18:58

Fixed costsa. are equal to explicit costs plus implicit costs. b. do not vary as output varies. c. are the same as total costs for any level of output greater than zero. d. are another name for sunk costs.

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Charles Schmitt · Answer 1

b. do not vary as output varies.

Explanation:

Fixed cost are defined as those cost that is incurred by a business that do not vary with level of production. For example if a company pays rent wether it produces goods or not it will incur the same rent expense. So this cost does not vary with output.

Variable cost on the other hand varies with production. The higher the level of production the higher the variable cost. For example the more the output required the more the labour employed to achieve higher output.