Total Fixed Cost

question 160

Multiple Choice

Total fixed cost:

• A) is the sum of all expenses which are closely related to output.
• B) is the sum of those costs which do not change in total no matter how much is produced.
• C) may vary in the short run-but is more or less fixed in the long run.
• D) is the sum of all costs of manufacturing and distributing a product.
• E) would be zero if the quantity produced were zero.

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Definitions:

Long Run Adjustment

The process through which firms adjust their levels of production, capital, and other inputs to reach a new equilibrium in response to changes in market conditions over time.

Organic

Refers to products, especially food or farming methods, that are produced or conducted without the use of synthetic chemicals, fertilizers, or genetically modified organisms.

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes involved in sustaining the activity in question.

Long Run Equilibrium

A state in an economy in which all factors of production and inputs can be varied, allowing firms to make adjustments and leading to the normalization of prices and output.