The field of economics assumes that rational decision-makers "think at the margin". Margin means additional, so the assumption is that people make choices based on the marginal benefits and the marginal costs of taking an action. In order to make the best decision or series of decisions, a person or firm should continue to take actions up until the marginal benefit equals the marginal cost. Benefits are often calculated in business by using marginal revenue. So the optimal production choice for a firm is to produce a quantity where marginal revenue equals marginal cost, or the last quantity before marginal cost exceeds marginal revenue. Microeconomists call this profit maximization. Each unit after this quantity will result in the marginal cost exceeding the marginal revenue and will reduce total profit.

If you are trying to solve for profit maximization mathematically, you need to find the functional form of a firm's cost structure, then you can calculate their marginal cost by taking the partial derivative with respect to quantity. To find marginal revenue, you just need to use the demand function to calculate the total revenue function, which is demand times quantity, then take the partial derivative with respect to quantity. The marginal cost function can be set equal to the marginal revenue and the profit-maximizing quantity can be derived using this method.

On the demand side, consumers optimize their utility or satisfaction by purchasing units up until the marginal utility per dollar of one good or service equals the marginal utility per dollar of another good or service, given a budget constraint. Consumers are attempting to get the best "bang for their buck", by optimizing for their highest level of satisfaction by finding the purchase combination given their marginal benefit (utility) and marginal cost (price).