Long-term is sometimes defined as a time frame that does not sink a fixed cost. In general, fixed costs refer to costs that vary with the amount of production. In addition, sunk costs refer to costs that cannot be recovered after payment. For example, if a company has to sign a lease for office space, the rental company headquarters will be a sunk cost. In addition, this will be a fixed cost, because after determining the scale of operations, the company will not need some incremental additional headquarters units for each additional output unit it produces. Obviously, if the company decides to make major expansions, the company will need a larger headquarters, but this is a long-term decision to choose a production scale. In the long run, there is no real fixed cost, because the company is free to choose the scale of operations that determine a fixed level of cost. In addition, in the long run, there is no sunk cost because the company can choose not to do business and the cost is zero.