Marginal Costs

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. [...]