More McHenry County Blog

Fixed costs in a newspaper operation are things like the building, press, composing equipment, etc. They must be paid regardless of how many newspapers are sold or how much advertising is sold.

Marginal costs are those which can be diminished if revenue falls below expectations. Staff, for example, can be laid off. One can print fewer newspapers.

You get the idea, class.

For someone with an automated phone operation, the equipment is a fixed cost. The owner pays for it whether or not it is used.

Since Jack Martin’s equipment is used mainly around election time, it is probably sitting idle most of the summer. So, the marginal cost of using it is limited to the time it takes an employee or volunteer to prepare and record a message and program the calling machine for the area to be called. Not much, I would guess.

The additional costs for the calls would probably be ZERO, if a flat rate phone calling plan is in effect. Figure out how much it costs to make a short phone call, if you wish. Would it be 5 cents a call?

Do you understand the difference between marginal and fixed costs now, class?

To return to McHenry County Blog, click here.