Fixed costs change based on daily productivity.

• A. False
• B. True
• C. Not sure
• D. Irrelevant

Answer: (A)

Fixed costs do not change with daily productivity in the short term. They stay constant regardless of how much you produce, as long as you’re within the relevant capacity range. What does vary with output is the cost per unit: higher production spreads the fixed cost over more units, lowering the per-unit fixed cost, while lower production spreads it over fewer units, raising the per-unit fixed cost. Only when you adjust capacity or take longer-term decisions would fixed costs change. So the statement is false because fixed costs remain unchanged by daily productivity changes in the short run.