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<p>[quote user="greyhounds"]</p> <p> </p> <div class="quote-header"> </div> <blockquote class="quote"> <div class="quote-user">Sam1</div> <div class="quote-content">Sam1 wrote the following post 23 minutes ago: V.Payne Intercity trains have a declining marginal cost curve  What you say about maringal cost curves and fixed costs covered by more units is true.</div> </blockquote> <div class="quote-footer"> </div> <p> </p> <p>Are you sure about the declining marginal cost curve?  I really question that.  I'm open to correction, but I see the marginal cost curve as a flat, horizontal line.  Much like the fixed cost amount.</p> <p>To me, it seems the marginal cost will be equal to the slope of the total cost curve.  i.e. the additional total cost of carrying 101 passengers instead of 100.  As long as the train has unsold capacity I don't see the slope of the total cost curve changing as we move from 100 to 101 to 102, etc. passengers.</p> <p>I reason the marginal cost curve is flat if unsold capacity exists.  I'm very open to correction on this, but that's my current reasoning.</p> <p>As to the average cost, yes it does decline with added passenger volume. [/quote]</p> <p>Marginal costing usually refers to the incremental cost of adding capacity, units of output, etc.</p> <p>It could apply to higher use of existing capacity, but it would only apply if the increase in existing capacity drove an incremental cost, i.e. more service personnel, addition fuel use because of an increase in weight, etc.</p> <p>Marginal pricing can apply to adding capacity or higher use of existing capacity.  </p>
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