Fixed costs exist only in the:
Multiple Choice
A. long run when some inputs are fixed.
B. long run when all inputs are fixed.
C. short run when some inputs are fixed.
D. short run when all inputs are fixed.
Ans) Fixed costs are the costs that do not depend upon the level of production. Costs of building, machinery, salaries, property tax etc are some examples of fixed costs. These costs occur only in short run and there are no fixed cost in long run due to increased production.
In short run some inputs are fixed and occur even if production is zero, while other inputs vary with the level of output and it is known as variable cost.
Option c is correct.
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