Total fixed cost
Total fixed cost (TFC) represents all costs that remain constant regardless of output level in the short run. These include rent, insurance, management salaries, and loan repayments that must be paid even if the firm produces nothing.
Real World
Pret A Manger pays roughly £300,000 a year in rent for a central London shop whether it sells 100 or 10,000 sandwiches a day — that rent is a fixed cost unchanged by output.
Exam Focus
Always state TFC is constant 'in the short run' — examiners penalise answers that omit the time period.
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