CMA Foundation · Fundamentals of Business Economics and Management · Cost of Production
In the short run, which of the following costs does NOT change when a firm increases its output from 100 units to 200 units?
Total fixed cost stays unchanged when output rises from 100 to 200 units in the short run, because it relates to fixed inputs like rent or machinery. Total variable cost, marginal cost and average variable cost all change with the level of output.
- ATotal variable cost
- BTotal fixed costCorrect
- CMarginal cost
- DAverage variable cost
Explanation
Total fixed cost is the cost of fixed inputs such as factory rent and remains constant at every output level in the short run. Total variable cost rises with output because more raw material and labour are needed. Marginal cost and average variable cost generally change as output changes.
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