Final answer:
Operating expenses, which are necessary fees for running a business, are true and include fixed and variable costs. Fixed costs do not change with production levels and include explicit costs like rent and salaries, as well as implicit costs like depreciation and unpaid owner labor. Understanding these cost distinctions is essential for business financial management.
Step-by-step explanation:
It is true that operating expenses are necessary fees for a business, such as employee salaries, rent, utilities, materials, equipment, and marketing costs. We can decompose costs into fixed costs and variable costs. Fixed costs are related to the fixed inputs, meaning they do not change in the short run and remain constant regardless of production levels. Examples include rent on a factory or retail space, cost of machinery or equipment, research and development, and advertising costs. However, the specific amount of fixed costs can fluctuate depending on the nature of the business.
Moreover, we must consider both explicit costs, which are actual out-of-pocket payments like wages and rent, and implicit costs, which are the opportunity costs of using resources already owned by the firm. Implicit costs can include non-monetary expenses like depreciation of materials and equipment, as well as the cost of the business owner's labor if they are not receiving a formal salary. These concepts are foundational for understanding the financial obligations involved in operating a business.