Reference no: EM132250852

Fixed costs are costs that are independent of output. These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include rent, buildings, machinery, etc. Verses, variable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc. So therefore my questions are:

1. Should a business have more fixed or variable costs?

2. What are the types of fixed and variable costs will you would incur in your business?

3. Will you have more variable than fixed costs? Why or why not?