Q. 105.0( 1 Vote )

Define fixed cost

Answer :

● Fixed cost is the cost that does not change with the change in the level of output.


● It remains constant.


● For example, the rent paid for the building.


● If the output is increased, the average fixed cost decreases.


● This is because the average fixed cost is the total fixed cost by output or AFC = TFC/ Output.


● The total fixed cost is constant, so the average fixed cost falls.


OR


● Marginal product is the increase in the total product as one more unit of the variable unit is added.


The behaviour of the marginal product when only one input is increased and other inputs are held constant is mentioned below:


● Initially, marginal product increases.


● After reaching a point, the marginal product begins to falls but remains positive.


● After some time, the marginal product becomes negative.


Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

When does the shiEconomics - Board Papers

What happens to tEconomics - Board Papers

Define fixed costEconomics - Board Papers

What is the relatEconomics - Board Papers