What are fixed costs?

1 Answer
Nallasivam V
Oct 31, 2015

Cost incurred on fixed factors is called fixed cost.

Explanation:

A producer has to employ fixed factors like Land, Building, Machinery etc and variable factors like, temporary workers, raw materials etc. The amount spend on the fixed factors is called fixed cost.

Again Fixed Cost has a unique feature. The Fixed Cost is there when the output is zero, and whatever be the level of output the Fixed Cost will not change.

It is a short run Phenomenon.

Fixed cost curve is parallel to x-axis. It signifies the above feature.

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