Which of the following is typically a fixed cost in the short run?

• A. Raw materials
• B. Wages of hourly workers
• C. Rent
• D. Utilities

Answer: (C)

In the short run, fixed costs are expenses that don’t change when you alter production. Rent fits this because you pay a set lease regardless of how much you produce. By contrast, raw materials depend on output—you buy more as you produce more, so they’re variable. Wages for hourly workers can be adjusted with production levels or hours worked, making them variable costs. Utilities depend on how much you use—lighting, heating, and power rise with production, so they’re variable too. So, rent is the typical fixed cost in the short run. (Note: there are rare cases where rent might vary, but that’s not the usual scenario.)