If a firm’s fixed cost remains constant, but its variable cost increases, what happens to the marginal cost? Select one: <\/p>\n\n\n\n
A. Marginal cost becomes zero <\/p>\n\n\n\n
B. Marginal cost remains the same <\/p>\n\n\n\n
C. Marginal cost increases <\/p>\n\n\n\n
D. Marginal cost decreases<\/p>\n\n\n\n
The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n Correct Answer: C. Marginal cost increases<\/strong><\/p>\n\n\n\n Marginal cost (MC) refers to the additional cost incurred when producing one more unit of a good or service<\/strong>. It is calculated by the change in total cost divided by the change in quantity produced: Marginal Cost (MC)=\u0394Total Cost\u0394Quantity\\text{Marginal Cost (MC)} = \\frac{\\Delta \\text{Total Cost}}{\\Delta \\text{Quantity}}<\/p>\n\n\n\n Total cost (TC) is the sum of fixed costs (FC)<\/strong> and variable costs (VC)<\/strong>: TC=FC+VC\\text{TC} = \\text{FC} + \\text{VC}<\/p>\n\n\n\n Fixed costs are those that do not change<\/strong> with the level of output (e.g., rent, salaries of permanent staff). In contrast, variable costs change with production levels (e.g., raw materials, wages of temporary workers).<\/p>\n\n\n\n If fixed costs remain constant<\/strong>, they do not influence the marginal cost directly. However, if variable costs increase<\/strong>, it means that the cost to produce each additional unit is now higher<\/strong>. This directly impacts the marginal cost, causing it to increase<\/strong> as well.<\/p>\n\n\n\n For example, suppose a company pays more for raw materials due to a shortage. Even though its rent (a fixed cost) hasn\u2019t changed, the cost of producing each additional unit has increased because each unit now uses more expensive inputs. This rise in per-unit variable cost causes a rise in marginal cost.<\/p>\n\n\n\n In practical terms, increasing marginal cost is a common scenario in real-world production. This often happens due to diminishing marginal returns\u2014where adding more of a variable input (like labor) to a fixed input (like machinery) results in less efficient production.<\/p>\n\n\n\n If a firm’s fixed cost remains constant, but its variable cost increases, what happens to the marginal cost? Select one: A. Marginal cost becomes zero B. Marginal cost remains the same C. Marginal cost increases D. Marginal cost decreases The correct answer and explanation is: Correct Answer: C. Marginal cost increases Explanation (300 words): Marginal […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-25222","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/25222","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=25222"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/25222\/revisions"}],"predecessor-version":[{"id":25223,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/25222\/revisions\/25223"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=25222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=25222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=25222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Explanation (300 words):<\/strong><\/h3>\n\n\n\n
Summary:<\/h3>\n\n\n\n
\n