Wednesday, July 27th 2016

Marginal Benefit


Marginal Benefit Meaning:
The increase in utility (that is, satisfaction) that the next unit of a good or service to become available will bring.

Marginal Benefit Example:
Marginal benefit takes into account the fact that the more we already have of something, the less utility we’re likely to derive from additional units. To a person who does not have one, the marginal benefit of a car might be high, but to a person who already has a car, an additional car has a much lower marginal benefit (you can’t drive two cars at once). People are motivated to buy when the marginal benefit of something (measured in dollars) is higher than its price.
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