The authors initially define fixed costs in Chapter 3 and then refine the concept in Chapter 7 by noting that the definition of fixed costs depends on our time horizon. Some costs that are fixed in a short time horizon (e.g., over the next year) may become variable costs over a longer period of time (e.g., five years or more). For example, your firm may have a three year employment contract with the general sales manager. Until the current contract expires, the manager’s salary may be a fixed cost for the firm, but this expense becomes variable beyond the term of the current contract. This time-dependent definition of fixed costs also applies to many other expenses, including facilities, equipment, and technology.

For the industry in which you work, how long does it take for all short-run fixed costs to become variable? Which fixed costs take the longest to become variable?

Note:

1.References (this does not count toward the required paper length)

FINALLY, you must cite your sources after every sentence which contains information from one of your sources. Just putting a citation at the end of a paragraph or section is not sufficient.

Also, do not state “The author” or “the text”. Use proper APA style. This is Last Name of Author (Year).

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