Thinking about fixed costs and variable costs takes a little practice. If you are working now (or recently) -- think about your own workplace. If you are not working, think about a product you buy, or a company that you know pretty well.

If your company experiences a big increase in demand for its product, what would it do to meet that demand? Suppose it had to increase its output by 50% in one month -- how would it do it?Which costs would be fixed, and which ones would be variable?