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The total cost for any number of outputs is the aggregate of fixed and variable costs.

TC = FC + VC

The fixed cost does not variate with the units of output. It remains constant in the short run even if the output produced is zero or larger鈥攆or example, the amount invested in capital. The capital does not change in the short run, even if the firm stops producing suddenly or expands its production.

The variable cost depends on the output produced. Suppose the firm increases its production, the variable cost will increase, and vice-versa.

Marginal cost is the change in total cost by an additional unit. For instance, if the total cost of producing 5 units is $100 and 6 units is $120. The marginal cost of producing the 6th unit is $20 (= $120 - $100).

The average fixed cost, average variable cost, and average total cost are per unit of output. As the units of output increase, the average costs decline.

The values for all the costs at successive units of output are given below.

As the output increases, the marginal cost, the average total cost, and the average variable cost eventually decline but ultimately increase. Thus, all the cost curves are non-linear in shape.

Also, the marginal cost increases rapidly at higher levels of output.