Practice question · Multiple choice
Two firms have identical marginal cost curves and different total costs at every output. How is that possible?
Hints
- Differentiate a function, then differentiate it again after adding 500. Compare.
- Ask what the marginal cost curve knows about the factory rent.
Show the answer
C. They differ by a constant of integration, the fixed costs
Why
The derivative annihilates constants, so marginal cost is silent about fixed costs, the integral recovers the shape and needs one known point to place it. This is why a firm can price on margin and still lose money, and why break-even analysis needs the constant back.
Practise Integral Calculus
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