If the total cost of a firm is Rs. 500 when output is zero, Rs. 1000 when output is 10 And Rs. 1,400 when output is 20, the fixed cost is equal to _________________.

Rs. 1,000

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Rs. 900

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Rs. 500

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None of the above

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Solution

The correct option is C Rs. 500
Fixed costs are indirect cost and are not directly proportional to the production process, instead these have to be paid even if production is zero. Thus in this example the fixed cost is Rs. 500 since it has to paid even when the output is zero.

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If the total cost of a firm is Rs. 500 when output is zero, Rs. 1000 when output is 10 And Rs. 1,400 when output is 20, the fixed cost is equal to _________________.

The correct option is C Rs. 500Fixed costs are indirect cost and are not directly proportional to the production process, instead these have to be paid even if production is zero. Thus in this example the fixed cost is Rs. 500 since it has to paid even when the output is zero.

The correct option is C Rs. 500
Fixed costs are indirect cost and are not directly proportional to the production process, instead these have to be paid even if production is zero. Thus in this example the fixed cost is Rs. 500 since it has to paid even when the output is zero.