Example: Ponderosa Development Corporation
Identify all costs and denote the marginal cost and marginal revenue for each house.
The monthly salaries total $35,000 and monthly office lease and supply costs total another $5,000. This $40,000 is a monthly fixed cost.
The total cost of land, material, labor, and sales commission per house, $105,000, is the marginal cost for a house.
The selling price of $115,000 is the marginal revenue per house.