Marginal Benefit in Economics: Definition & Example

Marginal Benefit in Economics: Definition & Example
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  • 0:02 A First Look at…
  • 0:53 What Is Marginal Benefit?
  • 1:33 Example of Marginal Benefit
  • 2:12 Lesson Summary
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Lesson Transcript
Instructor: Brianna Whiting
In this lesson, we'll learn about marginal benefit. We'll define the term and look at some examples. We'll also learn how to calculate marginal benefit.

A First Look at Marginal Benefit

We all love that sweet treat that we occasionally give into. You know what I am talking about - that piece of cake or candy bar. Whatever your guilty pleasure, we know it's a special treat because we limit ourselves to only occasionally indulging in it.

Let's imagine that, after a hard week of work, you decide to treat yourself to a cupcake at your favorite bakery. After eating your cupcake, you think to yourself, 'My week was so stressful, I deserve a second cupcake!' While standing in line a second time, you notice that there's only one more of your favorite cupcake left, and there is another customer ahead of you. While that customer might choose something else, you worry that the cupcake will be gone. After your long stressful week, you need the satisfaction of consuming one more cupcake. What you need to experience is marginal benefit.

What Is Marginal Benefit?

So, what does the term marginal benefit mean? It's the additional satisfaction that we get when we consume an additional good or service. It's also the maximum amount we're willing to pay so we can consume that additional good or service. So, in our bakery example, our marginal benefit is the satisfaction we get when we eat one more cupcake. It's also the maximum amount of money we are willing to pay so that we can purchase that last cupcake before someone else does. It's important to note that the more goods or services we consume, the less we're willing to pay for each additional good or service. This is because the benefit of that good or service decreases as the quantity consumed increases.

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