When the firm produces zero output, its fixed cost is
A) zero
B) the same as its total cost
C) the same as its variable cost
D) the same as its marginal cost
E) infinite

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change with the level of output, so when a firm produces zero output, its total cost consists solely of fixed costs. Variable and marginal costs, on the other hand, are dependent on the level of production.

When the Firm Produces Zero Output, Its Fixed Cost Is