📚 Learning Guide
Marginal Analysis
easy

In a scenario where a consumer is deciding between two bundles of goods, how does marginal analysis guide their choice?

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Learning Path
Learning Path

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Choose the Best Answer

A

By identifying the bundle where marginal benefit equals marginal cost

B

By choosing the bundle with the highest total cost

C

By maximizing the number of items purchased regardless of cost

D

By always selecting the least expensive option

Understanding the Answer

Let's break down why this is correct

Answer

Marginal analysis helps consumers make choices by evaluating the additional benefits of one option over another. When a consumer looks at two bundles of goods, they consider what extra satisfaction or value they will get from choosing one bundle instead of the other. For example, if a person is deciding between a bundle of fruit and a bundle of snacks, they will think about how much more enjoyment they will get from the snacks compared to the fruit. If the extra satisfaction from the snacks is greater than the additional cost, they are likely to choose the snacks. This way, marginal analysis helps consumers make informed decisions that maximize their happiness or utility.

Detailed Explanation

Marginal analysis helps you find the best choice by comparing the extra benefits and costs. Other options are incorrect because Choosing the bundle with the highest total cost is a common mistake; Maximizing the number of items bought can lead to waste.

Key Concepts

Marginal Analysis
Consumer Surplus
Opportunity Cost
Topic

Marginal Analysis

Difficulty

easy level question

Cognitive Level

understand

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