As an accountant you decide to quit your 90000 salary positi

As an? accountant, you decide to quit your? $90,000 salary position to open your own firm. Looking for spaces to rent for your? office, you quote a five year lease which requires a monthly payment of? $4,000.

From your study of accounting? (and economics), the lease

A.

is a variable cost of operating the accounting firm.

B.

is a fixed cost of operating the accounting firm.

C.

is an implicit cost of operating the accounting firm.

D.

is part of the marginal cost of operating the accounting firm.

Solution

Option B. is a fixed cost of operating the accounting firm.

Explanation: Variable costs change with the output level but fixed costs remain fixed with the output level. Here, the lease costs remains fixed with the output level.