What is Marginal Benefit?

Within the concepts of economics, the marginal benefit is one of the most fundamental and simple to understand, since it is the satisfaction, happiness or pleasure obtained by a person when consuming an additional unit of a good or service; in other words, it is the difference between what a consumer pays for a good or service and the maximum amount that in a daily situation he would be willing to pay. A very clear example of the situation is the following: a man is very hungry, he passes by a fast food establishment, this one has a reasonable budget, but since he is very hungry he is willing to pay two or three times the price. For the satisfaction that that meal will cause, while the second one will equally satisfy the individual, but not as much as the previous one, then there will come a point where they will be satisfied and if they continue consuming they will not obtain any benefit, therefore, it is evident that the Marginal benefit decreases as the additional unit is consumed.

In the field of economics, its function is vital for the study of consumption and economic variables. The phenomenon that produces the decrease in marginal benefit as additional units increase is the product of increasing consumer satisfaction that makes him pay less as these units increase. There is a close relationship between marginal benefit and consumer surplus, the latter being the difference between what a consumer is willing to pay for a good and service and what a person will actually pay for it.

Organizations take marginal benefit into account when conducting an analysis to find out how much consumers would be willing to pay in relation to their level of satisfaction, so this will help the company calculate price and output through necessary approximations to meet the objectives stipulated by shareholders and managers. In addition, economists use this benefit a lot as it is a useful tool in calculating production and estimating consumer and producer surplus, which will serve as a guide for the company in estimating its sales.

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A determining point for choosing decisions within organizations regarding production and sales is that it must be kept in mind that the marginal benefit and the marginal cost must have a positive difference and, thus, maximize the efficiency of the company.

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