Question

Use the following information to answer this question. Kim decides to quit her old job that paid $1,000 a month to open a flower shop in downtown Lexington. Suppose she opens her shop in a building she owns, which she could be renting out to someone else for $1,000 a month. In addition, A to Z Rental required her to sign a one year lease on the coolers needed for her shop and the rent is $200 a month. Hiring three assistants costs her $1,800 a month. Finally, the flowers, vases and other material needed for making flower arrangements average $5,000 a month.
Kim’s long run fixed costs are:

$ __________ per month

Answer 1

Answer:

$0

Explanation:

According to the scenario, computation of the given data are as follows,

Fixed costs are linked with fixed inputs, which do not fluctuate and remain constant in the short term.

The long run is a time during which all of the inputs are transformed into variables cost.

Hence, in long run, Kim's fixed cost will be $0.