Answer to Question #160021 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

Consumption and production behaviors are two critical economic behaviors considered in any business or organization. In the process of offering products or services, the business or organization should consider assessing or looking at the marginal units in relation to consumption and production. Such marginal units in the economic behaviors will enable the organization or business to determine the costs to incur and the price the customer will pay for the product or service offered within or outside the organization. In the process of evaluating consumption behavior, marginal units will help the organization to determine the price to quote on the products and services offered in the market. Production behavior will be assessed using marginal units to determine the cost of production as compared with the prices quoted in the market. In a situation that the costs of production are higher than the prices of the product, the organization might drop the product or increase its prices in the market.