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Questions and Answers
What is the characteristic of the marginal cost in the software industry?
What is the characteristic of the marginal cost in the software industry?
- It is variable
- It is close to zero (correct)
- It is always high
- It is fixed
What is the total cost of flying a 100-seat plane for an airline?
What is the total cost of flying a 100-seat plane for an airline?
- $100,000
- $5,000
- $50,000 (correct)
- $50
How many empty seats are there on a flight?
How many empty seats are there on a flight?
- 10 (correct)
- 15
- 20
- 5
What is the correct answer to the question of the marginal cost of flying a passenger?
What is the correct answer to the question of the marginal cost of flying a passenger?
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Which of the following industries has a marginal cost that is close to zero?
Which of the following industries has a marginal cost that is close to zero?
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Study Notes
Marginal Cost Industries
- The software industry is an example of an industry with a marginal cost that is close to zero.
Airline Industry Cost Calculation
- The total cost of flying a 100-seat plane for an airline is $50,000.
- If there are 10 empty seats on a flight, the marginal cost of flying a passenger can be calculated.
- The marginal cost of flying a passenger is $5,000 ($50,000 ÷ 100 seats) or $500 ($50,000 ÷ 100 seats, then subtracting the 10 empty seats).
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