Fixed+Costs

A fixed cost is a short run expense that remains constant regardless of any shift in output produced. Often, such costs are associated with the very existence of the plant and may include rental payments, interest, debts, etc. Clearly, and most importantly, the cost remains the same, even if the output is zero. A fixed cost is only applicable to a company's short run period, for it is something that will be paid off once or across a specific period of time. In the long run, however; all inputs including resources, investment, and even plant size are variable as are all costs. Thus the idea of a "fixed cost" does not pertain to a long run period. An example of a fixed cost would be as follows. An individual wants to invest in their own company, and thus must take out a loan in order to be able to sufficiently begin thid company. This loan is in fact a fixed cost. Regardless of how much output the individual produces within their specified "short run" period, this initial loan must be paid back, most likely with interest, at the end of the specified period. On the other hand, however, in the long run, it is unclear as to how a company's output and even the company itself will change and thus this loan will no longer be a fixed cost, but rather a variable cost for it will inevitably change as the company and its production do as well.
 * Fixed Costs**

As clearly can be seen in this graph, regardless of "Sales" or output produced, any fixed cost will, in the short run remain constant.

media type="google" key="-198717490991183830&hl=en&fs=true" width="400" height="326" This video is ridiculously long, however the section on fixed costs occurs from about 2 minutes 20 seconds to about 3 minutes.

External Links [|Wikipedia-Fixed Costs] [|Economics Tutorial- Fixed and Variable Cost]Fixed and Variable Costs definitions and examples of an economic concept http://accounting.suite101.com/article.cfm/fixed_and_variable_costs

Sample Problem Which is NOT an example of a fixed cost? a. the interest owed at the end of the year on rental property b. the charge for electricity and other resources c. a 5000 dollar fixed yearly rate per worker d. the debt a company owes a bank and or individual firm

ANSWER: B, of the provided costs, this is the ONLY variable cost. The cost for resources and fuel, such as electricity, will always vary per unit output. A, C, and D are only constant, nonvariable costs.