(And the Role of Government in the Market
System)
Definition

 Marginal cost (MC) = additional cost from the
consumption of the next unit of goods and services
 Marginal benefit (MB) = additional benefit from the
consumption of the next unit of goods and services
 Marginal equilibrium (MB = MC) = when the costs
equal the benefits
Investopedia

 Investopedia
 Example: If you exercise 5x a week and want to add
a 6th day, you would use marginal analysis to
determine whether the benefits of that 6th day
(calories burned, endurance gained, muscles built)
would be worth the costs (sleep lost, less energy for
other activities, increased risk of injury)
Mr. Clifford!

 Mr. Clifford and the Holy Grail
Marginal Analysis

 Marginal Analysis
Switch Gears!

 Market System (with government involvement)
Flowchart (part 2)

 Using your previous market flowchart, fill in the
spaces that you know of
 The next blank space terms are:
Expenditures (2x) <<also called “Government Spending”
Goods and Services (3x)
Taxes (2x)
Resources
HW

 Find two (2) practice problems (with the answers) so
that you can teach the class how to solve them next
Thursday on our Practice Problems Day!