During autumn​ months, passenger railroads across the globe deal with a condition called slippery rail. It results from a combination of​ water, leaf​ oil, and pressure from the​ train's weight, which creates a slippery black ooze that prevents trains from gaining traction.

Question

Part 2
One solution for slippery rail is to cut back trees from all of a rail​ firm's rail network on a regular​ basis, thereby helping prevent the problem from developing. If​ incurred, would this railroad expense be a better example of a fixed cost or a variable​ cost? Why?
Part 3
A.
This is an example of a variable cost because it is a​ long-run cost.
B.
This is an example of a fixed cost because the cost​ doesn't vary with the number of trains.
C.
The cost can be either fixed or variable depending on whether we are talking about the short run or long run.

Answer 1

B. This is an example of a fixed cost because the cost doesn't vary with the number of trains.

In this scenario, cutting back trees from the rail network is a necessary and regular maintenance expense that must be incurred regardless of the number of trains running on the network. It is not directly affected by changes in train frequency or usage, making it a fixed cost.