ECONOMICS

Detailed explanation-1: -Fixed cost refers to the cost of a business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, and insurance.

Detailed explanation-2: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.

Detailed explanation-3: -Fixed cost remains constant simply because they do not change often month-on-month. Fixed cost doesn’t mean it won’t change, but it changes over a longer period. For example, rental of an office space don’t change monthly. It could change annually or once every 2 to 3 years.

Detailed explanation-4: -Total costs are composed of both total fixed costs and total variable costs. Total fixed costs are the sum of all consistent, non-variable expenses a company must pay.

Detailed explanation-5: -Fixed cost: A fixed cost remains constant in total amount, but changes, if expressed on a per unit basis, inversely with changes in volume. Mixed cost: A mixed cost contains both variable and fixed cost elements.