Question

Which of the following costs does not change as output changes?

a. Step-up cost
b. Fixed cost
c. Opportunity cost
d. Variable cost

Answer 1

Fixed cost is the cost that does not change as output changes; it remains constant regardless of production levels.

Step-by-step explanation:

The cost that does not change as output changes is fixed cost. Fixed costs, such as rent or salaries for permanent staff, are costs that a firm incurs before producing any output and remain constant regardless of the level of production. On the other hand, variable costs, which can include labor and raw materials, increase or decrease with the level of output produced. Step-up costs may change but only at certain levels of production, and opportunity costs aren't directly tied to production levels but instead relate to the potential benefits lost when choosing one alternative over another.