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Q: The cost that a firm incurs to employ fixed inputs is called :
  • A. average fixed cost
  • B. average variable cost
  • C. total fixed cost
  • D. total variable cost
Correct Answer: Option C - The cost that a firm incurs to employ fixed inputs is called total fixed costs. Total fixed cost does not change regardless of production or lack of production. Fixed costs are those costs that do not change when sales or production volume increase or decreases. This is because they are not directly associated with manufacturing of a product or delivering a service.
C. The cost that a firm incurs to employ fixed inputs is called total fixed costs. Total fixed cost does not change regardless of production or lack of production. Fixed costs are those costs that do not change when sales or production volume increase or decreases. This is because they are not directly associated with manufacturing of a product or delivering a service.

Explanations:

The cost that a firm incurs to employ fixed inputs is called total fixed costs. Total fixed cost does not change regardless of production or lack of production. Fixed costs are those costs that do not change when sales or production volume increase or decreases. This is because they are not directly associated with manufacturing of a product or delivering a service.