Difference between revisions of "Fixed costs"
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| − | Fixed costs are costs that do not vary based on the amount of production or output. In other words, these costs exist regardless of whether a company is in full production or shut down. Fixed costs include rent, property taxes and debt. Costs, that depend on the amount of output, are [[variable costs]]. | + | Fixed costs are costs that do not vary based on the amount of production or output. In other words, these costs exist regardless of whether a company is in full production or shut down. Fixed costs include rent, property taxes and debt. Costs, that depend on the amount of output, are [[variable costs]]. In the long run, variable costs are zero, as a firm can always choose to shut down. |
[[category:economics]] | [[category:economics]] | ||
Revision as of 22:54, June 20, 2007
Fixed costs are costs that do not vary based on the amount of production or output. In other words, these costs exist regardless of whether a company is in full production or shut down. Fixed costs include rent, property taxes and debt. Costs, that depend on the amount of output, are variable costs. In the long run, variable costs are zero, as a firm can always choose to shut down.