How does marginal analysis work to help make better decisions?

Economics Dec 15, 2020

Expert Solution

Marginal analysis works to help make better decisions because every action that is taken is scrutinized in order to try and assess whether or not the benefits of said action outweigh the costs. If they do, then it is an action worth taking, but if costs of the additional unit of production outweigh the benefits, then it is not worth taking up. This is why it is said that optimal solutions exist when marginal benefit equals marginal costs.

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