Fixed Cost Refers to

question 271

Multiple Choice

Fixed cost refers to

• 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 sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

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Definitions:

Baking Supplies

Items and ingredients specifically used for the process of baking, such as flour, yeast, baking soda, and baking pans.

Law of Diminishing Returns

This economic law states that as one factor of production is increased while others are held constant, the incremental gains in output will eventually diminish.

Product Outputs

The quantity of goods or services produced by a business or economy in a given period.

Marginal Product

The additional output produced as a result of using one more unit of a particular input, keeping other inputs constant.