Question

Question 10 1 pts Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the (1) tank tops. (ii) wages paid to the other yoga instructors. (iii) lease on the studio space. (iv) insurance that the landlord requires Sonia to carry for the studio. O (1) only (i) and (ii) only (iii) and (iv) only (i), (ii), (iii), and (iv)

Answer 1

ANSWER: (iii) and (iv) only

FIXED COST:  A fixed cost is the cost that does not change with the change in the good and services provided. Fixed cost are the expenses to be paid, independent of the magnitude of the business activities.

In above case, (iii) lease on the studio space, and (iv) insurance that the landlord requires sonia to carry for the studio are the fixed cost as these two payments will be paid by the Sonia(the owner) irrespective of the amount she make out of the business. In other words, these payments are fixed and will be paid by the Sonia irrespective of the number of people joins her yoga centre.

(i) tank tops, and (ii) wages paid to yoga instructors are the variable cost which changes with the magnitude of business activities. If Sonia teaches more number of students then she have to recruit more instructors and pay them. Similarly, the cost on tank tops will increase with the number of people joining the yoga centre and decrease with the decrease in the people.