What is the relationship between marginal costs and fixed costs in a business's production process?

Marginal costs refer to the additional cost incurred when producing one more unit of a product, while fixed costs are the expenses that do not change regardless of the production level, such as rent or salaries. The relationship between these two types of costs is important for businesses because it helps them decide how much to produce. For instance, if a company has high fixed costs but low marginal costs, it might benefit from producing more units to spread out those fixed costs over a larger number of products. However, if the marginal cost of producing an extra unit is higher than the price it can sell that unit for, the business should avoid increasing production. Understanding this relationship helps businesses optimize their production process and maximize profit.