Why might fixed costs be positive even if output is zero?Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aFixed inputs must be replaced each period of time not matter what the level of output.bFixed costs may represent contracts such as leases or loans that must be paid for a period of time.cFixed costs may represent repairs that must be made before a factory closes permanently.dFixed costs may represent the value of the owner's time that could be spent doing something else.
Question
Why might fixed costs be positive even if output is zero?Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.aFixed inputs must be replaced each period of time not matter what the level of output.bFixed costs may represent contracts such as leases or loans that must be paid for a period of time.cFixed costs may represent repairs that must be made before a factory closes permanently.dFixed costs may represent the value of the owner's time that could be spent doing something else.
Solution
The correct answer is b. Fixed costs may represent contracts such as leases or loans that must be paid for a period of time.
This is because fixed costs are costs that do not change with the level of output. They are incurred even if the production is zero. Examples of fixed costs include rent for the business premises, interest on loans, and salaries of permanent staff. These costs have to be paid regardless of whether the business is producing anything or not.
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