In this unit on Marginal Analysis, you will learn about the
following concepts:
*What is meant by the term "marginal"?
*What is meant by the term "marginal analysis"?
*What is meant by the saying "all decisions are made at the
margin"?
following concepts:
*What is meant by the term "marginal"?
*What is meant by the term "marginal analysis"?
*What is meant by the saying "all decisions are made at the
margin"?
What does the term "marginal" mean?
The word "marginal" means additional. So any time you see
the word "marginal," just say to yourself, "additional." You
will see this word many times throughout your study of
economics. You will learn about marginal benefits,
marginal revenue, marginal costs, marginal utility, marginal
utility per-dollar spent, marginal social benefits, marginal
social costs, marginal propensity to save, marginal propensity
to consume, marginal tax rates, and the list goes on and on.
The word "marginal" means additional. So any time you see
the word "marginal," just say to yourself, "additional." You
will see this word many times throughout your study of
economics. You will learn about marginal benefits,
marginal revenue, marginal costs, marginal utility, marginal
utility per-dollar spent, marginal social benefits, marginal
social costs, marginal propensity to save, marginal propensity
to consume, marginal tax rates, and the list goes on and on.
What does the term "marginal analysis" measurement
mean?
Marginal analysis is a way of measuring the additional
benefits of making a decision compared to the additional
costs of making a decision. Obviously, when you make
a decision you want to get the most out of it. In life, we
sometimes call this, "getting the most bang for your buck."
Without your even knowing it, whenever you make a
decision, you weigh your additional costs and your
additional benefits and then come up with a decision.
A variety of Internet sources estimate that an adult makes
about 35,000 remotely conscious decisions each day,
while a child makes about 3,000 per day. Remember,
just to blink your eye lids is a decision based on marginal
analysis.
mean?
Marginal analysis is a way of measuring the additional
benefits of making a decision compared to the additional
costs of making a decision. Obviously, when you make
a decision you want to get the most out of it. In life, we
sometimes call this, "getting the most bang for your buck."
Without your even knowing it, whenever you make a
decision, you weigh your additional costs and your
additional benefits and then come up with a decision.
A variety of Internet sources estimate that an adult makes
about 35,000 remotely conscious decisions each day,
while a child makes about 3,000 per day. Remember,
just to blink your eye lids is a decision based on marginal
analysis.
What is meant by the saying "all decisions are made at the
margin"?
The word "marginal" comes from the root word "margin."
Margin means it is the weighing of the additional costs
and additional benefits of a specific change in the current
situation.
Read the lesson below so you understand this definition
better.
margin"?
The word "marginal" comes from the root word "margin."
Margin means it is the weighing of the additional costs
and additional benefits of a specific change in the current
situation.
Read the lesson below so you understand this definition
better.
In this unit on Marginal Analysis, you learned about the
following concepts:
*What is meant by the term "marginal"?
*What is meant by the term "marginal analysis"?
*What is meant by the saying "all decisions are made at the
margin"?
following concepts:
*What is meant by the term "marginal"?
*What is meant by the term "marginal analysis"?
*What is meant by the saying "all decisions are made at the
margin"?
Chicago Blackhawks and
Illinois State Lottery--
One adult fan would be
randomly chosen at each home
game, and if the Blackhawks
scored at exactly the 10-minute
mark of the second period --
not a second over or under --
then that fan would win $1
million.
Illinois State Lottery--
One adult fan would be
randomly chosen at each home
game, and if the Blackhawks
scored at exactly the 10-minute
mark of the second period --
not a second over or under --
then that fan would win $1
million.
Let's take the information in the marginal benefits and marginal
costs table above and put it into graph form below. You will notice
wherever marginal benefits is equal to marginal costs, that is
where Edmund's satisfaction is maximized.
costs table above and put it into graph form below. You will notice
wherever marginal benefits is equal to marginal costs, that is
where Edmund's satisfaction is maximized.
| Marginal Analysis |
| Steven M. Reff Economics Lecturer University of Arizona (2007 - 2016) The 2015 University of Arizona Five-Star Faculty Award |
Five days after the promotion started, the Blackhawks scored at the
10-minute mark of the second period. See photo above.
If the Blackhawks had scored at the 9:59 mark, would the fan have won
$1 million? No. If the Blackhawks had scored at the 10:01 mark, would
the fan have won $1 million? No.
The fan won $1 million because the decision was made at the margin.
10-minute mark of the second period. See photo above.
If the Blackhawks had scored at the 9:59 mark, would the fan have won
$1 million? No. If the Blackhawks had scored at the 10:01 mark, would
the fan have won $1 million? No.
The fan won $1 million because the decision was made at the margin.
Another example of "decisions are made at the margin" is found in the
interactive lesson below.
interactive lesson below.
Shown below are a few examples of "decisions being made at the
margin."
margin."
On the graph above, take your cursor or finger and click or touch
the percentages of clean air in the table above to show the points
on the graph.
the percentages of clean air in the table above to show the points
on the graph.
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