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I think you should go back to college, or study free-market economics. Marginal cost of production: http://en.wikipedia.org/wiki/Marginal_cost


According to the page you linked to, in economics and finance marginal cost is the change in total cost that arises when the quantity produced changes by one unit.

When production of Scarface movie tickets increases from zero units to one unit the film has to be made, increasing the total costs from zero to $25,000,000.

Hence, the ∆Q is 1 unit and the ∆TC is $25,000,000 giving a marginal cost of ∆TC/∆Q = $25000000/1 = $25,000,000

Could you be more specific about why I need to go to college? Is there some error in my calculation?


There's an implicit assumption of "more than one unit" in a market. One of anything is a curiosity, not amenable to economic analysis. In this particular market, popular music, where the issue under discussion is massive copying, it's downright disingenuous to do the "sunk costs are marginal cost of the first unit" schtick. Marginal cost gets calculated without sunk costs.


It says right there in the link you provided that the marginal cost is the change in total cost that arises when the quantity produced changes by one unit.

We're discussing the mass entertainment market, where total costs are dominated by fixed costs. Do you seriously think it's disingenuous to take fixed costs into account? I'd say it's far more disingenuous to just ignore the bulk of your expenditure.




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