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Marginal Analysis definitions

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  • Marginal Analysis
    A method for making optimal choices by comparing extra benefits and extra costs of one more unit.
  • Marginal Benefit
    The extra satisfaction or happiness gained from consuming an additional unit, often subjective and quantified in class.
  • Marginal Cost
    The extra expense, including monetary, emotional, psychological, or time, from consuming one more unit.
  • Optimum Consumption
    The point where extra satisfaction equals extra expense, maximizing overall happiness from consumption.
  • Allocative Efficiency
    A state where resources are distributed so that extra satisfaction matches extra expense for each unit.
  • Graphical Representation
    A visual tool using colored lines to show the relationship between extra satisfaction and extra expense.
  • Subjectivity
    A quality of extra satisfaction, varying by individual preferences and not easily measured.
  • Quantification
    The process of assigning numerical values to extra satisfaction for academic purposes.
  • Intersection
    The point on a graph where the extra satisfaction line meets the extra expense line, indicating optimal choice.
  • Overconsumption
    A situation where extra expense exceeds extra satisfaction, leading to less overall happiness.
  • Underconsumption
    A scenario where extra satisfaction is greater than extra expense, suggesting more should be consumed.
  • Personal Preferences
    Individual differences affecting how quickly extra satisfaction decreases and extra expense increases.
  • Satiation
    A state reached when consuming more units no longer increases happiness, often at the optimal point.
  • Emotional Cost
    Non-monetary expense, such as discomfort or regret, associated with consuming additional units.
  • Psychological Cost
    Mental or emotional burden incurred from consuming more units, distinct from monetary expense.