Question

Which of the following statement is true?

Options

• Fixed cost curve is parallel to X-axis because it changes at all levels of output.

• Fixed cost curve is parallel to Y-axis because it remains constant at all levels of output.

• The Fixed cost curve is parallel to X-axis because it remains constant at all levels of output.

• Fixed cost curve is parallel to Y-axis because it changes at all levels of output.

Answer 1

The fixed cost curve is parallel to X-axis because it remains constant at all levels of output.

Explanation:

Because it remains constant at all levels of output, the fixed cost curve is parallel to the x-axis. As a result, fixed cost refers to the cost of fixed elements of production such as land and machinery.