Final answer:
Fixed costs in economics do not vary with the level of output and remain constant. They are different from variable costs, explicit costs, implicit costs, and sunk costs. The correct answer is option: do not vary as output varies.
Step-by-step explanation:
Fixed costs are costs that do not vary as output varies. These costs remain constant regardless of the level of production. They are incurred by the firm before any output is produced and include expenses like rent, salaries, and insurance.
Examples of fixed costs include the monthly rent for a store or the salaries of employees. These costs are called fixed because they do not change with the level of production.
Fixed costs are different from variable costs, which do vary with the level of output. Variable costs increase as production increases and decrease when production decreases. An example of a variable cost would be the cost of raw materials needed for production.
Therefore, fixed costs are not the same as total costs for any level of output greater than zero. Total costs include both fixed costs and variable costs. Fixed costs are also not equal to explicit costs plus implicit costs. Explicit costs are the actual out-of-pocket expenses that a firm incurs, such as payments for wages and rent, while implicit costs are the opportunity costs associated with using resources in a particular way, such as the cost of using the owner's time and capital.
Finally, fixed costs are not another name for sunk costs. Sunk costs are costs that have already been incurred and cannot be recovered. They are irrelevant to current decision-making since they cannot be changed. In contrast, fixed costs are ongoing expenses that are necessary for the firm's operations but can still be changed in the long run.