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Fixed costs

Production costs that do not vary in line with the number of units produced e.g. the acquisition cost of capital equipment.

Below is a list of some of the types of fixed costs that firms have to pay. For instance all businesses have to pay rent for the offices and factories that they work in. This cost is fixed because a contract is agreed and they have to pay a fixed amount of rent each month. This is the same for loan repayments or salary payments to employees.

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