CFA Practice Question

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CFA Practice Question

What is total cost equal to when output is zero in the short run?
Correct Answer: fixed costs

When output is zero, there are no variable costs. However, a firm still has to pay its fixed costs (overhead expenses like rent and loan repayments) in the short run. In the long run, the firm would have enough time to get out from underneath its overhead expenses. But not in the short run.

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danlan Variable costs are zero when output is zero
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