Thinking at the Margin

Economists often look at decisions in small steps, or "at the margin." Marginal analysis means weighing the additional benefits and costs of a little more or a little less of something.

The Marginal Principle

Rational decision-makers will continue an activity as long as the marginal benefit is greater than or equal to the marginal cost.

Everyday Choices

Marginal analysis helps answer questions like: Should you study one more hour? Should a factory produce one more unit? Should you eat another slice of pizza?

Real-World Impact

Businesses use marginal analysis to decide production levels, and consumers use it to decide how to spend their money most wisely.