Learn more about fixed, variable and marginal costs.

By Publisher: Khan Academy | Factsheet

Fixed cost, variable cost and marginal cost are very important concepts to understand in economics. Fixed costs are business expenses and are often time-related such as salaries and rents which are paid on a monthly basis. Variable costs are expenses related to business activity and change in proportion to an increase or decrease in this activity. Marginal cost is the change in total cost that arises when the quantity of goods produced increases by one unit. It is a measure of the cost of producing one additional unit. This free online economics course explains in a simple and clear manner the concepts behind fixed, variable and marginal costs using worked examples. The relationship between marginal cost, average total cost and marginal revenue is also outlined. By studying this course the learner will appreciate the importance of these costs in economics, and why and how they are calculated. This free online economics course will be of great interest to all professionals in economics, finance and business who would like a greater knowledge and understanding of fixed, variable and marginal costs, and to all learners who would like a greater insight into the factors that determine these key costs in economics.