The total cost to the firm of producing zero units of output is A. its variable cost in both the short run and the long run. B. its fixed cost in both the short run and the long run. C. its fixed cost in the short run and zero in the long run. D. zero in both the short run and the long run.

Question

Business

Muhammad Church

8 March, 06:33

The total cost to the firm of producing zero units of output is A. its variable cost in both the short run and the long run. B. its fixed cost in both the short run and the long run. C. its fixed cost in the short run and zero in the long run. D. zero in both the short run and the long run.

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Answers (1)

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Alvin Kelley · Answer 1

B. its fixed cost in both the short run and the long run.

Explanation:

As there is no production the fixed costs remains the same for short run and long run too, because there is no activity which might be used for these costs allocation in the short or long run. In the long run a fixed cost might behave as a variable cost if there is any activity involved. I the short run the fixed costs is considered as fixed whether there is any activity or not.