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Marginal cost is said to be independent of fixed cost. The reason is that:
AFixed cost is always larger than the variable cost
BOnly variable cost changes total cost as output rises
CMarginal cost is always equal to average fixed cost
DTotal fixed cost itself falls as output increases
Answer & Solution
Correct answer: B. Only variable cost changes total cost as output rises
1. MC = change in total cost when output rises by one unit.
2. Total cost changes only through its variable component, because fixed cost stays constant with output.
3. So the change in total cost is purely a change in variable cost, making MC independent of fixed cost.
4. The relative size of fixed cost (A) is irrelevant, MC does not equal AFC (C), and total fixed cost itself does not fall with output (D, only AFC does). Hence option B.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit II "Theory of Cost", p.6_
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