Marginal Use
The use you get out of one more item. For example, a carpenter with three hammers who doesn't need a forth such that it would be useless.Marginal Utility
Marginal utility is the value you get by purchasing one more good. For example, a household that has two televisions that is considering buying a third.Marginal Benefit
Marginal benefit is another common term for marginal utility that describes the value a market participant gets by purchasing one more of a good. For example, a consumer who has just purchased four winter tires may get very little benefit from buying a 5th.Marginal Rate of Substitution
The rate at which a consumer is willing to substitute one good for another and stay at the same satisfaction level. This can be mapped on an indifference curve that depicts the combinations of two or more goods that give a consumer equal satisfaction. For example:Combination | Apples | Oranges |
A | 10 | 0 |
B | 7 | 1 |
C | 5 | 2 |
D | 2 | 4 |
Marginal Cost
Marginal cost is the cost to produce one more item. If a factory is at its capacity, producing one more item per month may require a new factory. However, usually marginal cost goes down as you produce more due to economies of scale. For example, a factory producing 10 bicycles may be able to produce one more for $200. A factory producing 300,000 bicycles may be able to produce one more for $42.Marginal Revenue
The revenue generated by producing one more product. A luxury fashion brand that produces 1,000 units of a particular style of boot may be able to charge $600 for one more. If they produce 10,000 units of the boot they may be able to charge $200 for one more as they begin to saturate their market.Marginal Product of Labor
The output of one more hour of work. For example, an entrepreneur may find that their hours start to add more value as they work longer such that working one hour a week produces no value but working one more hour when they are already working 60 hours produces significant output.Marginal Tax Rate
The amount of tax you need to pay for $1 more of income. If you are making $40,000 you may pay $0.05 for an extra dollar of income. If you are making $200,000 you may pay $0.40 for an extra dollar of income. If the marginal tax rate gets too high individuals have little incentive to make more money.Marginal Rate of Transformation
The rate at which one output must be sacrificed for another. For example, a bakery that must sacrifice 6 muffins for every loaf of bread at a particular production level.Marginal Propensity to Save
The amount you save out of an extra dollar of income. At a low income level people find it hard to save. At an high income level, an individual could potentially save all of their income beyond a certain cost of living.Marginal Propensity to Consume
The amount you spend out of an extra dollar of income. As income rises some individuals will make upgrades to their lifestyle while others will save. Generally speaking, as income rises, marginal propensity to consume goes down as an individual is able to save more of their income to build wealth.| Overview: Marginal Change | ||
Type | ||
Definition (1) | The effect of adding or subtracting one more. | |
Definition (2) | The effect of adding or subtracting one more at a point in time. | |
Definition (3) | The effect of adding or subtracting one more given a particular state of things. | |
Related Concepts | ||
