Which term describes costs that do not vary with the quantity of output produced?

Which term describes costs that do not vary with the quantity of output produced?

• A. Variable costs
• B. Marginal costs
• C. Fixed costs
• D. Inputs

Answer: (C)

Fixed costs are costs that stay the same no matter how much you produce. They don’t change with output level because they arise from contracts or arrangements (like rent, salaries of permanent staff, or insurance) and are incurred even if production is zero. This is what sets them apart from variable costs, which increase as you produce more (such as raw materials or direct labor tied to production). Marginal cost, on the other hand, is the cost of producing one additional unit, not the overall level of cost at a given output. Inputs are resources used in production, not a cost behavior category. So the term that describes costs that do not vary with output is fixed costs.

Fixed costs are costs that stay the same no matter how much you produce. They don’t change with output level because they arise from contracts or arrangements (like rent, salaries of permanent staff, or insurance) and are incurred even if production is zero. This is what sets them apart from variable costs, which increase as you produce more (such as raw materials or direct labor tied to production). Marginal cost, on the other hand, is the cost of producing one additional unit, not the overall level of cost at a given output. Inputs are resources used in production, not a cost behavior category. So the term that describes costs that do not vary with output is fixed costs.