Q.What do you mean by Fixed Cost ?

Fixed cost is the part of short-run cost that stays constant at all output levels, including zero output.

Fixed cost, also called Total Fixed Cost (TFC), supplementary cost or overhead cost, is the expenditure that a firm incurs on fixed factors of production and which does not change with the volume of output in the short run.

Characteristics:

• It remains constant whether the firm produces zero units or its maximum output.
• It must be paid even if production is stopped temporarily.
• On a graph, the TFC curve is a horizontal straight line parallel to the output axis.
• Average Fixed Cost (AFC = TFC ÷ output) falls continuously as output rises, because the same fixed cost is spread over more units. …