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Fixed costs include rent, salaries, utilities, and other expenses that don't depend on the number of units produced. One obvious way to reduce fixed costs per unit sold would be to sell more units. Other ways might include: reducing salaries, finding a cheaper place to rent, and investing in energy-efficiency measures to reduce utility costs.
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In the short run the Sure-Screen T-Shirt Company is producing 500 units of output Its average variable costs are 2.00 and its average fixed costs are 50 The firm's total costs?
1,250
What categories of costs combine to create a firm's total cost?
A firm adds its fixed costs and capable costs to determine its todal cost at each level of output.
What role do fixed costs of production play in determining a firm's profitability in the short run?
Fixed costs of production are expenses that do not change regardless of the level of output. In the short run, fixed costs play a significant role in determining a firm's profitability because they must be covered before a company can make a profit. If a firm cannot generate enough revenue to cover its fixed costs, it may experience losses in the short run.
What are a business firm's fixed and variable costs of production?
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
If a firm decides to produce no output in the short run its costs will be?
its fixed cost
