Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To determine the optimal level of consumption
B
To evaluate the total cost of production
C
To identify fixed costs of production
D
To assess historical economic trends
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of marginal analysis in economics is to help individuals and businesses make decisions by comparing the additional benefits and costs of an action. This means looking at how much more you gain or lose when you increase or decrease an activity by a small amount, known as the "marginal" change. For example, if a farmer considers planting one more acre of corn, they would analyze the extra profit from the corn against the costs of planting and maintaining that acre. By doing this, they can decide whether the extra acre is worth it or not. Ultimately, marginal analysis helps achieve social optimality by guiding resources to their most efficient use, ensuring that the benefits of actions outweigh the costs.
Detailed Explanation
Marginal analysis helps us find the best amount to consume. Other options are incorrect because Some might think marginal analysis is about total costs; People may confuse marginal analysis with fixed costs.
Key Concepts
marginal benefit
Topic
Marginal Analysis and Social Optimality
Difficulty
easy level question
Cognitive Level
understand
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