Question

If a store has a “buy one, get one free” sale and an item costs $\$10$, what is the marginal cost of the second item?

• A. $\$7.50$
• B. $\$10$
• C. $\$5$
• D. $\$15$
• E. $\$0$

Answer 1

The correct option is E

$\$0$

Explanation for correct option:

Marginal cost is the additional cost for each additional unit.

If a store has a “buy one, get one free” sale. So, when the first product is bought, the second product is obtained for free.

The person is only paying for a single product.

So, the cost of the additional unit is $0$.

Therefore, the marginal cost of the second product is $\$0$.

Hence, option (E) is correct.