Please discuss the cost of owning a car. Assume the car is a fixed input while...
Please discuss the cost of owning a car. Assume the car is a fixed input while it is in the garage and a variable input when you drive it. What are the fixed costs of owning a car (as it sits in the garage) and the variable costs of owning a car (as you drive the car)? Discuss.
Homework Answers
The fixed cost is that cost which does not change with the level of output. So if the car is not in use and is parked in a garage still it would face certain costs like, insurance, pollution check, road and other taxes, cost of cleaning the car, and registration (renewal) cost.
The possible variable costs could be maintenance and upkeep, fuel and other oil costs such as engine and brake oil, wear and tear of tyres and other depreciation of the machinery.
So a person has to shell out money periodically in order to own a car. The other options could vary according to the distance of travel. Other modes could be more convenient option than driving own car, whereas, driving own car has its own pros.
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