Commercial Applications
A firm has to pay a fixed rent of ₹500 for the post-paid mobile bill and further pay extra charges for the calls made in a month. Identify the type of cost mentioned here.
- Fixed cost
- Variable cost
- Semi-Fixed cost
- Unit cost
Cost
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Answer
Semi-Fixed cost
Reason — This is a classic example of a semi-fixed (semi-variable) cost because it has both a fixed component and a variable component. The ₹500 monthly rent has to be paid even if no calls are made (fixed component – cost of providing capacity), while the extra charges depend on the number/duration of calls made (variable component – cost of using the capacity). The textbook itself uses the example of telephone rent + call charges to illustrate semi-fixed costs.
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