Ace the 2026 ABC IB Business Management Paper 1 – Your Ultimate Prep Adventure Awaits!

Fixed costs are costs that stay the same regardless of how much you produce in the short term. They are payments you still have to make even if output is zero, such as rent, salaries of permanent staff, or depreciation. Because they don’t vary with production, the total fixed cost remains constant over a range of output, while the fixed cost per unit falls as you produce more units. This contrasts with variable costs, which rise directly with output. In the long run, all costs can be adjusted, but in the short term fixed costs stay fixed.