Final answer:
Fixed costs are expenses that do not vary with changes in production or sales volume. Examples include advertising, insurance, and management salaries.
Step-by-step explanation:
Fixed costs are those expenses that a company must incur regardless of the level of production or sales. Such expenses remain constant in the short run irrespective of the quantity of goods or services produced or sold. Some examples of fixed costs include rent, insurance, salaries of permanent employees, property taxes, and depreciation of fixed assets. These expenses are essential for the smooth functioning of a business and are incurred irrespective of the level of activity. By understanding fixed costs, a business can better plan and manage its finances and make informed decisions regarding pricing, production, and overall profitability.