ECONOMICS

Detailed explanation-1: -A fixed cost is a cost that remains constant; it does not change with the output level of goods and services. It is an operating expense of a business, but it is independent of business activity.

Detailed explanation-2: -Although fixed cost per unit decreases with increases in activity levels, total fixed cost is not affected by changes in the activity level within the relevant range (i.e., total fixed cost remains constant even if the activity level changes. Examples include rent, depreciation, insurance.

Detailed explanation-3: -Total Costs Total fixed costs are the sum of all consistent, non-variable expenses a company must pay. For example, suppose a company leases office space for $10, 000 per month, rents machinery for $5, 000 per month, and has a $1, 000 monthly utility bill. In this case, the company’s total fixed costs would be $16, 000.

Detailed explanation-4: -Answer and Explanation: The given statement is true.

Detailed explanation-5: -Whatever amount of output the firm produces, this cost remains fixed for the firm. TFC continues to exist even when production is stopped in the short run as well as in the long run. Hence, correct answer is option B.