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What is an example of a marginal benefit?
What is an example of a marginal benefit?
Expert Solution
Suppose a consumer consumes one unit of a good, and let's say that individual derived five units of satisfaction. Now, if the consumer increases its consumption to two units and derives eight units of satisfaction upon consuming two units of good together, then the marginal benefit upon consuming the second unit is three units of satisfaction. Thus, the marginal benefit decreases upon increasing the consumption of a good. From the above example, one can conclude that marginal benefit can also be referred to as a marginal utility.
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