In a short run, fixed cost remain constant, but variable cost change with changes in total product.TrueFalse
Question
In a short run, fixed cost remain constant, but variable cost change with changes in total product.
True/False
Solution
Answer: True
In the short run, fixed costs such as rent, salaries of permanent staff, and equipment costs do not change regardless of the level of production. These costs remain constant whether a firm produces a little or a lot. On the other hand, variable costs, such as materials and labor directly involved in production, fluctuate with the level of output. As the total product increases, the variable costs also increase because more resources are needed to produce additional units. Therefore, the statement is accurate: in the short run, fixed costs remain constant, while variable costs change with changes in total product.
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