Thursday, August 11, 2011

Simple marginal cost question?

OK, so, I understand marginal cost as being the change in cost from one item to the next. Here's what I'm not sure of, if item X costs $2 but the second one only costs $1.50 is the marginal cost .50 or -.50? Also, if a 3rd item X costs only $.50, is the marginal cost 1.50 (the change from the original to the third) or $1 (the change from the second to the third)?

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