Which statement is true about fixed costs?

Which statement is true about fixed costs?

• A. They are included in marginal cost
• B. They vary with production
• C. They do not vary with production
• D. They are the same as variable costs

Answer: (C)

Fixed costs stay constant regardless of how much you produce. Because they don’t change as output changes, they don’t affect marginal cost, which measures the change in total cost when you produce one more unit. That’s why fixed costs are not tied to the level of production. Examples include rent, insurance, and salaries for permanent staff—they’re paid whether you’re producing a lot or a little. In contrast, variable costs rise with production, like seeds, fertilizer, and hourly labor. So the true statement is that fixed costs do not vary with production.

Fixed costs stay constant regardless of how much you produce. Because they don’t change as output changes, they don’t affect marginal cost, which measures the change in total cost when you produce one more unit. That’s why fixed costs are not tied to the level of production. Examples include rent, insurance, and salaries for permanent staff—they’re paid whether you’re producing a lot or a little. In contrast, variable costs rise with production, like seeds, fertilizer, and hourly labor. So the true statement is that fixed costs do not vary with production.