Overview
Marginal analysis is a crucial economic tool that helps individuals and businesses make informed decisions by evaluating the additional costs and benefits of their actions. By understanding concepts like marginal cost and marginal benefit, one can determine the most efficient level of production or ...
Key Terms
Example: If producing one more car costs $20,000, the marginal cost is $20,000.
Example: If the satisfaction from eating one more slice of pizza is worth $5, the marginal benefit is $5.
Example: Policies that increase education access can enhance social welfare.
Example: A factory operating at full capacity is considered efficient.
Example: Choosing to spend time studying instead of working has an opportunity cost of lost wages.
Example: Adding more workers to a factory may initially increase output, but eventually, the benefit will decline.