Sample Problem: Calculating Marginal Cost

Melanie is a hairdresser and is able to provide haircuts for 8 people each day at a total cost of $50. If Melanie performed 9 haircuts it would cost her $60. What is the marginal cost of providing the 9^th haircut?

To solve this problem, we first need to understand what marginal cost is and then figure out how to calculate it. Marginal cost is the additional cost to a firm of producing one more unit of a good or service. In this case, the problem is asking for the marginal cost of going from 8 haircuts to 9 haircuts. To calculate the marginal cost you take the cost of 9 haircuts and subtract the cost of providing 8 haircuts.

$60 - $50 = $10.

The marginal cost of providing the 9^th haircut is $10.

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