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WAEC Economics 2008 Question 15

Question 15

Theory of Costs and Revenue

Which of the following is regarded as fixed cost?

  1. A.Expenditure on raw materials
  2. B.Expenditure on fuel
  3. C.Expenditure on power
  4. D.Rent on land.
Show the answer and explanation

Answer: D (Rent on land.)

Explanation

Rent must be paid whatever the level of output, so it is a fixed cost; the others vary with output.