Question

At zero level of output total cost = ?

• A. Marginal cost
• B. Fixed cost
• C. Total variable cost
• D. None of these

Hint:

At zero output, fixed costs are the only costs incurred, as they do not depend on the level of production.

Answer 1

The Correct Option is B

Step 1: Understanding costs in production.
In economics, costs are classified into fixed and variable costs. Fixed costs are those that do not change with the level of output, such as rent or salaries. Variable costs change as output changes. At zero output, there are no variable costs, but fixed costs still remain.

Step 2: Analyzing the options.
(A) Marginal cost: Incorrect. Marginal cost is the additional cost incurred by producing one more unit of output, which is not relevant at zero output.
(B) Fixed cost: Correct. At zero output, the total cost consists only of fixed costs, as these are incurred regardless of the level of production.
(C) Total variable cost: Incorrect. Total variable cost is zero at zero output, as no production is taking place.
(D) None of these: Incorrect, as the correct answer is (B).

Step 3: Conclusion.
At zero output, the total cost consists only of Fixed cost. Thus, the correct answer is (B).