Question

Does fixed cost affect marginal cost? Give reasons.

Answer 1

• No, fixed cost does not affect marginal cost.
• This is because marginal cost (MC) refers to the additional cost incurred in producing one more unit of output. Since fixed costs remain constant regardless of the level of output, they do not change when extra units are produced.
• Marginal cost is influenced only by changes in variable costs, such as costs of raw materials, wages of casual workers, and other inputs that vary with production.
• Therefore, only variable cost affects marginal cost, not fixed cost.