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In order to explain the concepts of marginal (variable) and fixed costs it is useful to consider the example in Box 1 above. There, the variable costs of the wire harnesses supplier would be the costs associated with producing one additional wire harness. Such costs may include inputs needed to produce the additional wire harness, including copper and plastic, electricity and labour-costs associated with the additional production. However, the wire harnesses supplier also incurs fixed costs in its production, such as marketing of its products and investment in new machinery. These costs are not affected by the production of one additional wire harness, and are hence considered to be fixed.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-25 · Text as adopted (Official Journal); later amendments are not incorporated in this text.