lesson 3 marginalism 3-1 high school economics 3 rd edition © council for economic education, new...
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LESSON 3 MARGINALISM
3-1
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
How do you know when one more is too much?
LESSON 3 MARGINALISM
3-2
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Marginal utility is the extra value or additional satisfaction a
consumer obtains from consuming one additional unit of
output.
LESSON 3 MARGINALISM
3-3
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Diminishing marginal utility is when the additional satisfaction or marginal
utility associated with consuming additional units of the same product in
a given amount of time eventually declines.
LESSON 3 MARGINALISM
3-4
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Marginal analysis is a decision-making tool for comparing the
additional or marginal benefits of a course of action to the additional
or marginal costs.
LESSON 3 MARGINALISM
3-5
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Glove Production TableNumbe
r of Worker
s(1)
Number of Gloves
Produced(2)
(3) (4) (5)
LESSON 3 MARGINALISM
3-6
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Marginal product is the additional output produced by
each successive unit of an input.
LESSON 3 MARGINALISM
3-7
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
The law of diminishing returns states that as more units of a variable input
are added to one or more fixed inputs, eventually the number of additional
units of output produced will begin to fall.
LESSON 3 MARGINALISM
3-8
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
Marginal cost is the increase in a producer’s total cost when it
increases its output by one unit.