Final answer:
Fixed costs are business expenses that remain constant regardless of the level of production or sales over a certain period. They differ from variable costs, which change with production levels. Examples include rent, machinery costs, and some advertising expenses.
Step-by-step explanation:
Costs that do not change with the change in the level of production for some time are classified as fixed costs.
Fixed costs are expenses that do not vary depending on the amount of goods or services a company produces, at least in the short run. These are costs that a company must pay regardless of its level of production or sales. Examples of fixed costs include rent on a factory or retail space, machinery costs, research and development expenses, and certain types of advertising.
Unlike fixed costs, variable costs fluctuate with the level of production. These can include material costs, labor, and other expenses that increase as production increases. Understanding the difference between fixed and variable costs is crucial for businesses as they make economic decisions regarding production and pricing.