This lesson from Advanced Placement Microeconomics (4th Edition) demonstrates how marginal analysis is used by economists to make allocation decisions. Students evaluate real-life situations and determine whether the marginal benefit is greater than the marginal cost.
- Understand why we all have to make decisions.
- Define the terms marginal benefit, marginal cost, total benefit, and total cost.
- Explain that economic decision making often focused on a comparison of marginal benefit and marginal cost to determine how many units of any activity should be provided.
- Emphasize the difference between marginal concepts and total concepts.
Please refer to the Marginal Analysis Teacher Lesson.
Ask the students if marginal analysis means that they should do all they can to complete an assignment or an activity to the best of their abilities, regardless of the cost? [They should compare the MB and the MC of each extra unit of the activity. If the MB is greater than (or equal to) the MC, they should undertake the next unit of the activity. If the MB is less than the MC, they should not undertake that unit.]
Not available for this lesson.
Please refer to the Marginal Analysis Student Lesson.
Grades 6-8, 9-12