Fixed Costs Remain Constant Regardless of Output

Steps:

• Recall that total fixed cost (TFC) is the portion of total cost that does not vary with output level.
• Define TFC as expenses like rent or salaries that persist even without production.
• Evaluate each option against this definition to identify the accurate statement.
• Confirm the option that aligns with TFC's independence from output.

Why D is correct:

• By definition, fixed costs are unavoidable obligations that must be paid irrespective of production volume, so TFC exists even at zero output.

Why the others are wrong:

• A: Fixed costs remain constant as output increases; they do not fall.
• B: Adding TFC and total variable cost yields total cost, not TFC alone.
• C: Dividing total cost by output gives average total cost, not TFC.

Final answer: D