Question

total fixed cost for a firm is Rs.100 when it produces 15 unit of output.if the level of output increases to 30 units,what will be the fixed cost in the short-run? give reason for your answer​

Answer 1

Fixed Cost = Rs. 100

Reason:

This is because in the short run, only one factor of production is variabe while rest all are fixed. So, in the short run, the fixed costs remain constant, whatsoever the level of output may be, the fixed costs remain fixed and have to be paid by the businessmen.

Example:

Mr. A has a pen manufacturing factory and in the short run, factors of production like land, machinery etc. will remain constant and labour, for example is variable.

Here, Mr. A will have to pay fo the electricity consumed by the machines for the production of any number of pens and if he doesn't own the land, he has to pay some fixed rent to the landlord, regardless of the number of pens he produced.

For example, the rent of land per month is Rs. 10,000 and in one month, he makes 1000 pens, he still pays Rs. 10,000 but let's say, in another month, he produces 10,000 pens by increasing labour, for example, but he'll still pay the rent of Rs. 10,000 to the landlord.

This Rs. 10,000 is known as the fixed cost.

More to know:

Long run: In  the long run, all the factors of production are variable.

Answer 2

Question:-

Total fixed cost for a firm is Rs.100 when it produces 15 unit of output.if the level of output increases to 30 units , what will be the fixed cost in the short-run?

Solution:-

Total fixed cost for firm =

15 = ₹ 100

Then ,

30 = ?

If it increases from 15 to 30 then = 2 × 100 = ₹ 200

Hence ,

• Cost is 200