Question

When a factory is operating in the short run? a. average fixed cost rises as output increases. b. it cannot alter variable costs. c. total cost and variable cost are usually the same.

Answer 1

Variable costs cannot be changed while a factory is running in the near term.

Why Do Fixed Costs Exist?

When a cost is referred to as fixed, it means that it doesn't fluctuate based on how many products or services are produced or sold. Costs associated with a company's operations that must be covered regardless of the company's specific operations are known as fixed costs.

Since they don't relate to the creation of any goods or services by a corporation, fixed expenses are therefore typically indirect costs. Typically, a company's overall expenditures are made up of two types of expenses: fixed and variable expenses. Shutdown points are typically used to cut back on fixed costs.

Learn more about fixed costs with the help of the given link:

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