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WAEC Economics 1993 Question 34

Question 34

Theory of Costs and Revenue

A firm's compulsory cost whether it is in production or not, is referred to as its

  1. A.prime cost
  2. B.variable cost
  3. C.marginal cost
  4. D.fixed cost
  5. E.average cost.
Show the answer and explanation

Answer: D (fixed cost)

Explanation

Fixed costs (rent, insurance) must be paid even when the firm produces nothing.