Question

True or false. Does fixed cost have to do with everything involving the firm? Including if the firm shuts down with costs after the fact (i.e. insurance, security, etc.)

Answer 1

Fixed costs are a part of the overall costs incurred by a firm and are not directly related to the quantity of output produced. The decision to shut down or continue producing is based on the firm's ability to cover its total costs, including both fixed and variable costs, with its total revenue.

Step-by-step explanation:

Fixed costs are a part of the overall costs incurred by a firm and are not directly related to the quantity of output produced. These costs include expenses like rent, insurance, security, and other expenses that do not change with the level of production. While fixed costs are important for the firm's operations, they do not necessarily determine whether the firm should shut down or continue producing. The decision to shut down or continue producing is based on the firm's ability to cover its total costs, including both fixed and variable costs, with its total revenue.