It is a constant cost. It does not change based on level of activity.

It changes based on level of activity. (Per Unit)

Cost of adding/purchasing/producing one more unit. E.g. price is $1 for <=100 units. Marginal cost of 99 units is $1 and $0.9 for 100 units (i.e. Unit 101 costs $0.9)

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NCSU ISE 510 Econ

NCSU ISE 510 Engineering Economics Definitions

Term	Definition
Fixed Cost	It is a constant cost. It does not change based on level of activity.
Variable Cost	It changes based on level of activity. (Per Unit)
Marginal Cost	Cost of adding/purchasing/producing one more unit. E.g. price is $1 for <=100 units. Marginal cost of 99 units is $1 and $0.9 for 100 units (i.e. Unit 101 costs $0.9)