Which of the following statements best describes a firm’s costs at a zero level of output?

Both fixed costs and variable costs are zero.
The firm’s variable costs are zero but marginal cost is positive.
Total fixed costs are zero but both marginal cost and average cost are increasing.
Total variable costs are zero but total fixed costs are positive, so total costs are positive.

Explanation
In the short run, fixed costs remain constant even if output is zero. Since no output is being produced, total variable costs are zero but total fixed costs may be positive, so total costs may be positive.