question_subject:
question_exam:
stats:
keywords:
In the short run, a manufacturing firm incurs various costs. Among the options provided, option 1 - insurance on buildings is considered a fixed cost. Fixed costs are expenses that do not change with the level of production or output.
Insurance on buildings is a fixed cost because it remains constant regardless of the amount of goods produced by the manufacturing firm. Whether the firm produces a few units or a large number of units, the insurance premium for the buildings will remain the same.
On the other hand, options 2, 3, and 4 - overtime payment to workers, cost of energy, and cost of raw materials, respectively, are typically considered variable costs. Variable costs fluctuate with the level of production. For example, overtime payment to workers will increase as production increases since more working hours are needed.
Therefore, the correct answer is option 1: Insurance on buildings.
It is important to note that fixed costs are incurred regardless of production levels, while variable costs change with production levels.