Which of These Would Be Considered a Fixed Cost

question 9

Multiple Choice

Which of these would be considered a fixed cost?

• A) cost of fuel for a transport company
• B) laundry costs to wash towels used by a hairdresser
• C) materials used in production
• D) insurance premium

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Definitions:

Marginal Cost Function

A mathematical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Optimal Output

The level of production that maximizes a firm’s profit or minimizes its cost under given conditions.

Profit

The financial gain acquired when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Industry Supply Curve

A graph that shows the relationship between the price of a good and the total output of the industry for that good.