Marginal cost is the rate of change of the total cost (ΔTC/ΔQ) and is dependent on the variable cost. This is because fixed cost is a constant and doesn’t affect the rate of change (remember, rate of change is effectively the differential of a function, in this case it would be the differential of the total cost function). Therefore any increase in fixed costs will have a 0 effect on Marginal Cost.

This can be shown in the tables below:

A firm’s fixed costs increase by 20%, what will marginal costs increase by?

Before FC Rise:

Q | FC | VC | TC | MC |

0 | 10 | 5 | 15 | – |

1 | 10 | 7 | 17 | 2 |

2 | 10 | 9 | 19 | 2 |

After FC Rise:

Q | FC | VC | TC | MC |

0 | 12 | 5 | 17 | – |

1 | 12 | 7 | 19 | 2 |

2 | 12 | 9 | 21 | 2 |

As we can see the 20% increase in fixed costs has no affect on the marginal costs.

If on the other hand the variable costs increased by 20% then the Marginal Cost would similarly increase by 20%.