When Marginal benefit (MB) exceed Marginal cost (MC). The society values the additional unit of product more than the cost of producing it. In this case, Net benefit will increase as long as firms produces more until the point where MB = MC. (Because every additional output will add more to MB than to MC, Net benefit will rise)
Marginal cost is the extra cost incurred in producing one unit of a product.If the marginal cost is more than average cost that means that costs are increasing and if it is less it means costs are decreasing.This way we find out how are business is progressing.
assumption of marginal costing
If marginal costs are relevant for specific situation or specific decision making scenario then marginal costs are relevant costs otherwise marginal costs can be irrelevant.
If MR is greater than MC, the firm should increase their production. The ideal amount of production is determined by allowing the marginal cost to equal the marginal revenue.
See: Alfred Marshall.
Economic perspective: a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions
Marginal net benefits= Marginal benefit- Marginal cost
Marginal net benefits= Marginal benefit- Marginal cost
A type of cost-benefit decision making that compares the extra benefits to the extra costs of an action
Marginal analysis...
Marginal analysis...
Rational Decision making occurs when marginal benefits of an action exceed the marginal costs
Marginal benefits and marginal costs
Where the marginal benefits equal marginal costs.
Rational choice
Economic theory makes much use of marginal concepts. Marginal cost, marginal revenue, marginal rate of substitution, marginal utility, marginal product, and marginal propensity to consume are a few examples. Marginal means on the margin and refers to what happens with a small change from the present position. It is the concept of economic choices to make small changes rather than large-scale adjustments. Marginal analysis is the key principle of profit-maximization in firms and utility maximization among consumers.