Fixed Cost Is

question 97

Multiple Choice

Fixed cost is

• A) the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
• B) the total expense incurred by a firm in producing and marketing a product, which equals the sum of overhead cost and variable cost.
• C) the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.
• D) the average amount of money received for selling one unit of a product or simply the price of that unit.
• E) the change in expenses that results from producing and marketing one additional unit of a product.

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Definitions:

Marginal Firm

A business that operates at the minimum level of profitability where any decrease in market prices would cause it to exit the market.

Accounting Profits

Accounting profits represent the financial gains of a business as calculated by revenue minus explicit costs, according to standard accounting practices.

Profit-Maximizing

A method or strategy that firms use to achieve the highest possible profit from their operations.

Economic Profit

The variance between a company's overall income and its opportunity expenses, covering both direct and indirect costs.