What is the difference between fixed costs and variable costs?

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In economics, fixed costs and variable costs are the two main kinds of costs associated with production of a good or service.

Fixed costs are costs that do not vary with the level of production.  They are the same if a firm produces one unit of their product or one million units.  Fixed costs typically include such things as the rent on the building in which the firm produces its product.

Variable costs are the costs that do vary with the level of production.  For example, a restaurant's fixed costs will include the cost of the food they prepare and serve to customers as well as the cost of the labor of wait staff and cooks.

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