Which of the following costs is fixed?

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Prepare for the OnRamps Economics College Exam with detailed multiple-choice questions and explanations. Strengthen your understanding and boost your performance!

Multiple Choice

Which of the following costs is fixed?

Explanation:
Fixed costs don’t change as you produce more or less in the short run. Rent is a classic example because the lease payment is set by the contract and stays the same regardless of how much you produce. Wages, on the other hand, often vary with hours worked or units produced; materials rise with output because you need more inputs for more products; utilities typically follow usage, though there can be a small fixed base charge, they mainly vary with production. So, the rent remains constant across different production levels, making it the fixed cost.

Fixed costs don’t change as you produce more or less in the short run. Rent is a classic example because the lease payment is set by the contract and stays the same regardless of how much you produce. Wages, on the other hand, often vary with hours worked or units produced; materials rise with output because you need more inputs for more products; utilities typically follow usage, though there can be a small fixed base charge, they mainly vary with production. So, the rent remains constant across different production levels, making it the fixed cost.

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