Difference between revisions of "Fixed costs"
Jump to navigation
Jump to search
(clarified point about all costs being variable in the long run.) |
|||
| Line 1: | Line 1: | ||
| − | 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, | + | 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, all costs are variable, as a firm can always choose to shut down. |
[[category:economics]] | [[category:economics]] | ||
Revision as of 18:37, November 8, 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, all costs are variable, as a firm can always choose to shut down.