What is a fixed cost for a driver?

A fixed cost for a driver refers to an expense that does not change based on the amount of driving done. In this context, the initial cost of a vehicle and licensing fees are considered fixed costs because they are incurred regardless of how much or how little the vehicle is used.

The initial cost of the vehicle is a substantial one-time expenditure that does not fluctuate with daily driving habits.

Licensing fees are also fixed because they represent a cost incurred to legally operate the vehicle, which is independent of the distance or frequency of trips taken.

In contrast, expenses like fuel and repair costs vary depending on how often the vehicle is used and can significantly change from month to month. Insurance premiums can also vary, especially depending on the chosen coverage and any claims made, but they generally reflect more consistent monthly or annual costs compared to the one-time expenses listed as the correct choice. Thus, identifying the initial cost of a vehicle and licensing fees as fixed costs illustrates a clear understanding of what constitutes fixed versus variable costs in driving.