BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Marginal costs are a function of the total cost of production, which includes fixed and variable costs. Fixed costs of production are constant, occur regularly, and do not change in the short-term with changes in production.

Detailed explanation-2: -To calculate total cost, you simply take the sum of all marginal cost at each output level up to the point you you are looking and add it to fixed cost. This works because the sum of marginal cost up to an output level is equal to variable costs and when added to fixed cost, we get total costs.

Detailed explanation-3: -In economics, the marginal cost is the change in total production cost that comes from making or producing one additional unit. To calculate marginal cost, divide the change in production costs by the change in quantity.

Detailed explanation-4: -The notion of total cost is used to define average cost (the average cost of a unit of output is the total cost divided by the number of units produced) and marginal cost (the marginal cost of a given unit of output is the increase in the total cost required to produce that unit).

Detailed explanation-5: -Both AC and MC are derived from total cost (TC). AC refers to TC per unit of output and MC refers to addition to TC when one more unit of output is produced.