Final answer:
The costs for Pepsi to air commercials during the hockey season are fixed costs because they remain constant regardless of the company's level of production or sales volume.
Step-by-step explanation:
The advertising costs incurred by Pepsi to air its commercials during the hockey season can be described as fixed costs. Fixed costs are expenditures that do not change regardless of the level of production. Advertising to popularize a brand name is an example of a fixed cost as it tends to remain constant even if the level of production or sales volume changes. In this context, whether Pepsi produces a large or small quantity of its products, the cost of airing commercials during the hockey season remains the same.
Therefore, it is not a cost that varies with the level of output or sales, such as a variable, prime, or conversion cost.