Description of Marginal Cost
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Southwest Airlines offers 4 flights per week day from cleveland, Oh to Tuscon, Az. If adding a 5th flight per week day would cost $15,000 per flight, or $110 per available seat, calculate the incremental costs bourne by Southwest following a decision to go ahead with a 5th flight per day for a minimal 60-flight trial period. What is the marginal cost? In this case, is incremental or marginal cost relavant for decision making purposes?
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this solution helps with a problem regarding description of marginal cost.
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First, marginal cost is the additional cost of producing one more unit of a good or service. In this case the additional ...
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