Marginal Benefit
Marginal Benefit Meaning:
The increase in utility (that is, satisfaction) that the next unit of a good or service to become available will bring.
The increase in utility (that is, satisfaction) that the next unit of a good or service to become available will bring.
Marginal Benefit Example:
Marginal benefit takes into account the fact that the more we already have of something, the less utility we’re likely to derive from additional units. To a person who does not have one, the marginal benefit of a car might be high, but to a person who already has a car, an additional car has a much lower marginal benefit (you can’t drive two cars at once). People are motivated to buy when the marginal benefit of something (measured in dollars) is higher than its price.
Marginal benefit takes into account the fact that the more we already have of something, the less utility we’re likely to derive from additional units. To a person who does not have one, the marginal benefit of a car might be high, but to a person who already has a car, an additional car has a much lower marginal benefit (you can’t drive two cars at once). People are motivated to buy when the marginal benefit of something (measured in dollars) is higher than its price.