Which of the following is another way of saying marginal benefits of an action?
The marginal benefit of an action is the highest amount a consumer is willing to pay for an extra unit of a good or service.
Marginal benefit is also referred to as marginal utility. It is measured by the increase in satisfaction that a consumer experiences from purchasing one more unit of a product.
It decreases as a consumer’s level of consumption increases, although some products that are considered necessities have marginal benefits that do not decline over time.
A business can use marginal benefit to set prices for products or services, or determine how much to produce. When the amount of profit generated from each extra unit of a good or service outweighs its cost, market efficiency is achieved.
In this case, a business is able to charge more for each additional unit and still generate the revenue needed to keep their company running. This helps them attract more customers and retain existing ones.
Using marginal benefit to decide how many units of a good or service to produce is important for both the business and the consumer. A business that uses it properly can make more profits and provide more value for their customers. When a business uses it incorrectly, they may end up losing out on revenue or producing more of an item than the consumer needs.