LESSON 3 MARGINALISM
How do you know when
one more is too much?
3-1
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
Marginal utility is the extra value or
additional satisfaction a consumer
obtains from consuming one
additional unit of output.
3-2
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
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.
3-3
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
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.
3-4
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
Glove Production Table
Number
of
Workers
(1)
Number of
Gloves
Produced
(2)
(3)
(4)
(5)
3-5
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
Marginal product is the additional
output produced by each successive
unit of an input.
3-6
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
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.
3-7
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 3 MARGINALISM
Marginal cost is the increase in a
producer’s total cost when it increases
its output by one unit.
3-8
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY