JAMB UTME - Economics - 2014 | Green Bridge CBT

Question 1 Report

Rent and administrative expenses are examples of

average fixed costs

average variable costs

fixed costs

variable costs

Answer Details

Rent and administrative expenses are examples of fixed costs. Fixed costs are expenses that do not change with the level of output or sales. They remain constant regardless of the amount of goods or services produced or sold. For example, rent for a storefront or office space is typically a fixed cost because it does not vary with the number of customers who visit the store or the amount of work done in the office. Administrative expenses, such as salaries for office staff, are also typically fixed costs because they do not vary with the level of production. Variable costs, on the other hand, are expenses that change with the level of output or sales. For example, the cost of raw materials used to produce a product is a variable cost because it increases as the amount of product produced increases.






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