Answer to Question #160002 in Microeconomics for jocelyn bantono

Question

1.      What is the importance of looking at the “marginal units” in evaluating economic behavior such as consumption and production behaviors?

Answer 1

Marginal units refer to the analysis of additional benefits of an activity compared to additional costs incurred in the same action. Marginal units are of great importance as they are used as a decision-making tool by companies to maximize their benefits. For instance, when two potential investments exist but investment funds are enough for one, it can be determined whether one option can result in more benefits than ten others. It is also useful when a manufacturer wants to expand new operations by either adding a new product line or increasing the volume of produced goods from the current product line.