If, in the short run, the level of output is zero, which of the following statement is true?
A) total variable cost is zero but total cost equals total fixed cost, and both of the latter exceed zero
B) total cost and total fixed cost graphs will begin at the origin
C) total fixed cost will also be zero at first but will rise once output rises
D) none of the above

Question

Quizplus · Accepted Answer

In the short run, when output is zero, total variable cost is zero because no variable inputs are used. However, total fixed cost is not zero as it includes costs that do not change with output, such as rent or salaries. Therefore, total cost equals total fixed cost, both of which exceed zero.

If, in the Short Run, the Level of Output Is