Question

You have figured out the marginal cost and marginal benefit of buying an extra smoothie. In two to three sentences, describe how you would use these measurements to make a decision that leaves you better off.

Answer 1

Marginal beneficit and marginal cost are economic concepts. On the one hand, the marginal beneficit is defined as the added satisfaction a consumer gets from an additional unit of a good or service. On the other hand, the marginal cost is the change in total cost that results from making or producing one additional item.

The consumer could use these measurements to consider whether the cost is higher than the benefit when purchasing an item or getting a new service. Do they really need to buy an extra t-shirt when they already have enough of them? The benefit would be that they would get another t-shirt. In addition, as this is a new piece of clothing, it would probably be more in fashion than the old ones. However, the consumer would have to spend an amount of money that perhaps he had saved for another purpose and consequently would lack money for it. If he decided not to buy the t- shirt, he would have said amount of money to pay for his taxes or services.  The same applies when it comes to the extra smoothie. The amount of money spent on the smoothie could be used to get something else and, by getting an extra one, you would feel fuller and perhaps would not eat a proper meal afterwards. You could also gain weight if the smoothie is not healthy, so in the end the cost is higher than the benefit.

Therefore, you could easily apply economic concepts, such as the ones described, in your everyday life so as to make decisions that leave you better off. By considering the cost associated with an extra purchase, you could start saving up money. Eventually, you could spend your savings to get a greater benefit. For instance, you could go on vacation without spending your salary and still comply with the payment of your taxes and services.

Answer 2

Answer:

I would need to know if the marginal cost that this product offers is advantageous for me. For this reason, I would start by evaluating the marginal cost of the product, then calculate and evaluate its marginal benefit, in order to reach a conclusion that tells me whether the marginal cost is less or greater than the benefit. If it is smaller, I will buy the product, if it is larger I will not buy it.

Explanation:

The marginal cost represents a variation of the total cost of the product in relation to how many units of that product were produced. This represents a situation where the product was produced at a cost, but according to the quantity produced, a cost will be added to the total cost, this increase is the marginal cost. When you buy a product, you pay the cost of production + the marginal cost.

The marginal benefit, on the other hand, is the minimum value that a customer believes is fair and is willing to pay for a product.