In the short run, some fixed costs exist. Which option reflects this?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the CIMA Fundamentals of Business Economics (BA1) Exam with question banks and study guides. Hone your skills with multiple choice questions and detailed explanations. Start your journey to success today!

Multiple Choice

In the short run, some fixed costs exist. Which option reflects this?

Explanation:
In the short run, not all inputs can be adjusted at once; capital, leases, and other long-term commitments stay the same regardless of how much you produce. Those are fixed costs, incurred even if you produce nothing at all. So, it’s correct to say that some fixed costs exist in the short run. At the same time, there are also costs that vary with output, like materials or utilities, so not all costs are fixed. The other statements imply there are no fixed costs at all or that fixed costs are zero, which isn’t true in the short run.

In the short run, not all inputs can be adjusted at once; capital, leases, and other long-term commitments stay the same regardless of how much you produce. Those are fixed costs, incurred even if you produce nothing at all. So, it’s correct to say that some fixed costs exist in the short run. At the same time, there are also costs that vary with output, like materials or utilities, so not all costs are fixed. The other statements imply there are no fixed costs at all or that fixed costs are zero, which isn’t true in the short run.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy