Question

Suppose there is a firm known as Jesse Industries that produces a product known as “Analcos”. At q=0, the total cost is $20 and then increases by $18 for each additional unit produced. What is the FC?

Group of answer choices

$0

$20

$35

$100

Not enough information

Answer 1

If we talk in simple terms then fixed cost are those cost which are constant in the short run

it does not depend on the quantity whether the quantity produced is 0 or n number of units

it will have fixed value

here in the given question for ANACOLAS,  at quantity zero- total cost is $20

total cost is the sum of fixed cost and variable cost

so here fixed cost is $20 and variable cost is zero now as the total cost increases by $18 but the fixed cost will remain the constant and it will be equal to $20

the correct answer here is option B