Fixed costs I.are not ﬁxed forever.
II)must be paid even if production is halted.
III)are generally affected by the amount of ﬁxed assets owned by a ﬁrm.
IV)per unit remain constant over a given range of production output.
A)I and III only.
B)II and IV only.
C)I, II, and III only.
D)I, II, and IV only.
E)I, II, III, and IV.

Question

Quizplus · Accepted Answer

I) Fixed costs are not fixed forever because they can change over time due to various factors such as inflation or changes in business scale. II) Fixed costs must be paid even if production is halted, as they are not directly tied to production levels. III) The amount of fixed assets a firm owns can affect its fixed costs, as more assets typically mean higher costs for things like depreciation, insurance, and property taxes. IV) This statement is incorrect because fixed costs per unit actually decrease as production output increases, due to the spreading of fixed costs over more units.

Fixed Costs I.are Not ﬁXed Forever