Friday, February 5, 2010

Is the question true fixed cost is always 0?

If you have a fixed cost can you add on whatevere and still have a fixed cost?Is the question true fixed cost is always 0?
Yes. Fixed cost is a cost that doesn't vary by production. If you have a new cost that doesn't vary it will be added on to the current fixed cost, which will increase the cost. For example: you have a fleet of delivery vehicles. The fixed cost would be the payments, taxes and licensing. The variable cost would be the gasoline, oil, and repairs, which will be different each month depending upon the amount of use. If you add another vehicle you would increase the current fixed cost by the fixed cost of the new vehicle.





However, fixed cost is never 0 in the real world.Is the question true fixed cost is always 0?
This is really a question for the category ';homework help';. But other poster gave a great and correct answer. Other poster must know economics.
As long as it doesn't change from month to month, yes.

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