For your next print mail campaign, you learn that the cost to print 5,000 postcards is $4,800 and cost to print 15,000 is $5,500. What is the marginal (extra) cost per postcard for the additional 10,000?

Answer: 7 cent

Explanation:

The term marginal cost refers to the additional cost incurred by producing one more unit of a good or service. Therefore, marginal cost is the change in the total cost of an item when the output increases by a unit.

In the scenario above,

Cost of printing 5000 postcards = $4,800

Cost to print 15000 post cards = $5,500

Tha marginal cost per postcard for the additional 10,000 postcards will be:

Change in total cost:

$5,500 - $4,800 = $700

Change in quantity:

15,000 - 5,000 = 10,000

Marginal cost per unit:

$700 / 10,000 = $0.07

$0.07 = 7 cent

Marginal cost per unit = 7 cent