Asked by lydia snyder on Jun 06, 2024

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If a firm produces nothing, which of the following costs will be zero?

A) Total cost
B) Fixed cost
C) Opportunity cost
D) Variable cost

Variable Cost

Expenses that change in proportion with the level of production or sales volume, such as raw materials and direct labor costs.

Total Cost

The sum of all expenses incurred in producing a good or service, including both fixed and variable costs.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

  • Understand the concepts of fixed, variable, and total costs in production.
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CN
Caitlyn N. GuzmanJun 09, 2024
Final Answer :
D
Explanation :
Variable costs change with the level of output. If a firm produces nothing, its variable costs, such as raw materials and direct labor, will be zero. Fixed costs, such as rent and salaries, still accrue regardless of production levels. Total cost includes both fixed and variable costs, so it won't be zero. Opportunity cost, the cost of the next best alternative foregone, is not directly related to production levels and thus won't be zero simply because production is zero.