Marginal cost includes both fixed cost and variable cost. Comment.

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Solution

No. Marginal cost is only variable cost, it does not include fixed cost. Because, marginal cost is additional cost and additional cost cannot be fixed cost.

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Calculate Total Variable Cost and Marginal Cost from the following cost schedule of a firm whose Total Fixed Costs are Rs. 12 :

$\begin{matrix} Output (Units) & 1 & 2 & 3 & 4 Total cost (Rs) & 20 & 26 & 31 & 38 \end{matrix}$

Output(kg)	0	1	2	3	4
Total Cost (Rs.)	$80$	$102$	$122$	$140$	$156$

Output (Units)	Average Fixed Cost (Rs.)	Marginal Cost (Rs.)	Average Variable Cost (Rs.)	Average Cost (Rs.)
$1$ $2$ $3$ $4$ $5$	$60$ - $20$ - $12$	$20$ - - $18$ -	- $19$ $18$ - -	- - - - $31$

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