A Firm's Total Fixed Cost

question 298

Multiple Choice

A firm's total fixed cost:

• A)stays constant in the short run.
• B)falls as the firm produces more output in the short run.
• C)falls as the firm produces more output in the long run.
• D)increases as the firm produces more output.

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Definitions:

Incremental Manufacturing Cost

The additional costs incurred to produce an additional unit of product, including materials, labor, and overheads.

Product Costs

Product costs are the costs directly associated with the production of goods, including direct materials, direct labor, and manufacturing overhead.

Period Costs

Expenses that are not directly tied to the production of goods, such as administrative and selling expenses, and are expensed in the period they are incurred.

Period Costs

Expenses that are not directly tied to production activities and are expensed in the period they are incurred, such as administrative and selling expenses.