If fixed costs do not change, then marginal cost A. equals the change in average variable cost divided by the change in output. B. equals the change in variable cost divided by the change in output. C. equals the change in average fixed cost divided by the change in output. D. also remains constant.

Question

Business

Krystal Mitchell

17 September, 04:47

If fixed costs do not change, then marginal cost A. equals the change in average variable cost divided by the change in output. B. equals the change in variable cost divided by the change in output. C. equals the change in average fixed cost divided by the change in output. D. also remains constant.

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Answers (1)

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Remington Pearson · Answer 1

B. Equals the change in variable cost divided by the change in output

Explanation:

All those business expenses which are independent on the level of goods or services that the company produces are included in the fixed costs. These include lease and rent payments, insurance, salaries, interest payments etc.

The change in total cost which arises due to the increment in the cost of produced good by one unit is termed as marginal cost.

When fixed cost is not changing, the marginal cost is calculated by dividing the difference in total cost by difference in output.