Marginal Cost

The author of this letter points out a common misconception about costs. The average cost of providing a service is not the same as the additional cost of providing one more. Written about the context of education costs in an American town, it has relevance anywhere where you can ‘add one more’ without increasing fixed costs.

“But currently our schools are way below capacity and adding new students would add virtually no additional costs. ”

LETTER: Adding new students would bring no additional costs

About Jonathan Rooks

Jonathan is an accountant who specialises in Mangement Accounting, the running of a business. He works with and entrepreneurs to help them increase income and reduce costs.

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