Overview
Marginal analysis is a crucial concept in economics that helps individuals and businesses make informed decisions by evaluating the additional benefits and costs associated with their choices. By understanding marginal cost and marginal benefit, decision-makers can identify the optimal point for pro...
Key Terms
Example: If producing one more car costs $20,000, the marginal cost is $20,000.
Example: If eating one more slice of pizza gives you 10 units of satisfaction, the marginal benefit is 10.
Example: Choosing to produce 100 units where marginal cost equals marginal benefit.
Example: Adding more workers to a factory may initially increase output, but eventually, the increase will slow down.
Example: Consumers aim to maximize their utility when making purchasing decisions.
Example: Businesses use cost-benefit analysis to decide whether to launch a new product.