Describe what fixed costs and marginal costs mean to a company.

A fixed cost is a cost that does not change regardless of an increase or decrease in the number of goods or services produced. A fixed cost is paid by the business regardless of business activity or not. An example of a fixed cost is rent or mortgage, regardless of the number of units produced, the mortage or rent does not change yet, still has to be paid. A marginal cost is a cost that goes up by adding just one additional unit of a product or service. Since these change with the change in production, supplies is an example of a marginal cost. If you order enough supplies for 299 goods but you decide to increase your supply to 300, supplies to make that last good are needed.