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If fixed cost at \( Q=100 \) is \( \$ 130 \), then fixed cost at \( Q=0 \) is \( \$ 0 \) fixed cost at \( Q=0 \) is less than \( \$ 130 \) fixed cost at \( Q=200 \) is \( \$ 260 \) fixed cost at \( Q=200 \) is \( \$ 130 \) it is impossible to calculate fixed costs at any other quantity

Ask by Hamilton Lambert. in the United States
Mar 14,2025

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Tutor-Verified Answer

Answer

The fixed cost remains \( \$130 \) at all quantities, including \( Q = 200 \).

Solution

To analyze the fixed costs based on the information provided, let's clarify the concept of fixed costs: 1. **Fixed Costs**: These are costs that do not change with the level of output (quantity, \( Q \)). They remain constant regardless of how much is produced. Given the information: - At \( Q = 100 \), the fixed cost is \( \$ 130 \). Now, let's evaluate the statements one by one: 1. **Fixed cost at \( Q=0 \) is \( \$ 0 \)**: This statement is incorrect. Fixed costs are constant and do not change with the quantity produced. Since the fixed cost at \( Q = 100 \) is \( \$ 130 \), it must also be \( \$ 130 \) at \( Q = 0 \). 2. **Fixed cost at \( Q=0 \) is less than \( \$ 130 \)**: This statement is also incorrect for the same reason as above. The fixed cost remains \( \$ 130 \) at all levels of output, including \( Q = 0 \). 3. **Fixed cost at \( Q=200 \) is \( \$ 260 \)**: This statement is incorrect. The fixed cost does not change with quantity; it remains \( \$ 130 \) regardless of whether \( Q = 100 \), \( Q = 200 \), or any other quantity. 4. **Fixed cost at \( Q=200 \) is \( \$ 130 \)**: This statement is correct. The fixed cost remains constant at \( \$ 130 \) at all levels of output. 5. **It is impossible to calculate fixed costs at any other quantity**: This statement is misleading. While we cannot derive fixed costs from variable costs without additional information, we know that fixed costs are constant at \( \$ 130 \) for any quantity. In summary, the only correct statement is that the fixed cost at \( Q = 200 \) is \( \$ 130 \). All other statements are incorrect.

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The Deep Dive

Fixed costs are constant and do not change with the level of output. Therefore, even when \( Q=0 \), the fixed cost remains at \( \$ 130 \) as this is a cost incurred regardless of production levels. So, fixed cost at \( Q=0 \) is indeed \( \$ 130 \), not \( \$ 0 \) or less. When considering changes in output, remember that fixed costs will always be the same – they are not influenced by how much or how little you produce. So, at \( Q=200 \), fixed costs remain at \( \$ 130 \) too. Therefore, the total cost at \( Q=200 \) would just include any variable costs associated with that specific level of output on top of the fixed cost. Keep this in mind when analyzing costs; fixed costs are your steadfast allies in the financial game!

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