Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal… Full Answer
Profits are maximized when marginal costs equals marginal revenue because fixed costs are now spread over a larger amount of revenue. This means that total cost per unit declines and profits increase. Another way to say this is that this… Full Answer
By definition marginal cost is the change in total costs for each additional item produced. Marginal costs will decrease when changes in inputs result in costs increasing at a decreasing rate. An example might be gains in productivity when hiring… Full Answer
Contrast to what we would normally think, changes in fixed costs do not affect marginal cost. For example, if a product costs $10 to produce, and the fixed cost goes up to $25, then marginal cost stays the same.
Marginal cost is the extra cost incurred in producing one unit of a product.If the marginal cost is more than average cost that means that costs are increasing and if it is less it means costs are decreasing.This way we… Full Answer
The increase or decrease in the total cost of a production run for making one additional unit of an item. It is computed in situations where the breakeven point has been reached: the fixed costs have already been absorbed by… Full Answer