Question

Which of the following indicates fixed costs?

a)electricity bill
b) expenses on raw materials
c)wages of daily workers
d)interest on fixed capital
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Answer 1

d)interest on fixed capital

Step-by-step explanation:

Financial expenses such as interest payments are a form of fixed cost. This is because financial expenses do not depend directly on the level or amount of output of a firm. While the firm may incurr in debt to expand operation, the financial expense is set independently from the level of production, even if such expense varies for other reasons (for example, in the case of credits with variable rates).