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Production and cost — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsProduction and cost3 Marks
Question
Define total fixed cost (Supplement/ Indirect/ overhead cost).
OR
Define fixed cost.

OR
What is meant by fixed (supplementary) costs of a firm? Give examples.
✓

Answer

  1. Fixed costs are those costs of production which do not change with a change in output.
  2. These are the costs incurred on fixed factors, like rent of land and building, interest, etc. These are unavoidable contractual costs.
  3. Fixed costs are also called overhead costs or general costs because these are common for all the units produced. These costs are also called supplementary costs or indirect costs.
  4. The shape of Total fixed Cost is horizontal (Parallel to X-Axis). They have to be incurred when the output is large or small or even zero.

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