ⓘ Marginal concepts. In economics, marginal concepts are associated with a specific change in the quantity used of a good or service, as opposed to some notion of ..

                                     

ⓘ Marginal concepts

In economics, marginal concepts are associated with a specific change in the quantity used of a good or service, as opposed to some notion of the over-all significance of that class of good or service, or of some total quantity thereof.

                                     

1. Marginality

Constraints are conceptualized as a border or margin. The location of the margin for any individual corresponds to his or her endowment, broadly conceived to include opportunities. This endowment is determined by many things including physical laws which constrain how forms of energy and matter may be transformed, accidents of nature which determine the presence of natural resources, and the outcomes of past decisions made both by others and by the individual himself or herself.

A value that holds true given particular constraints is a marginal value. A change that would be affected as or by a specific loosening or tightening of those constraints is a marginal change, as large as the smallest relevant division of that good or service. For reasons of tractability, it is often assumed in neoclassical analysis that goods and services are continuously divisible. In such context, a marginal change may be an infinitesimal change or a limit. However, strictly speaking, the smallest relevant division may be quite large.

                                     

2. Some important marginal concepts

The marginal use of a good or service is the specific use to which an agent would put a given increase, or the specific use of the good or service that would be abandoned in response to a given decrease.

The marginal utility of a good or service is the utility of the specific use to which an agent would put a given increase in that good or service, or of the specific use that would be abandoned in response to a given decrease. In other words, marginal utility is the utility of the marginal use.

The marginal rate of substitution is the rate of substitution that is the least favorable rate, at the margin, at which an agent is willing to exchange units of one good or service for units of another.

A marginal benefit is a benefit howsoever ranked or measured associated with a marginal change.

The term" marginal cost ” may refer to an opportunity cost at the margin, or more narrowly to marginal pecuniary cost - that is to say marginal cost measured by forgone cash flow.

Other marginal concepts include but are not limited to:

  • marginal physical product sometimes also known as" marginal product”
  • marginal product of labor
  • marginal product of capital
  • marginal propensity to save and consume
  • marginal rate of transformation, the rate at which one output or result must be sacrificed in order to increase another output or result
  • marginal tax rate
  • marginal revenue product

Marginalism is the use of marginal concepts to explain economic phenomena.

The related concept of elasticity is the ratio of the incremental percentage change in one variable with respect to an incremental percentage change in another variable.

                                     
  • Cost - sharing mechanism Economic surplus Marginal concepts Marginal factor cost Marginal product of labor Marginal revenue Merit goods O Sullivan, Arthur
  • Under this assumption, marginal concepts including marginal utility, may be expressed in terms of differential calculus. Marginal utility can then be defined
  • series Marginal seat or marginal constituency or marginal in politics Marginalism Marginal analysis Marginal concepts Marginal cost Marginal demand Marginal
  • utility, the diamond has greater marginal utility. Although the central concept of marginalism is that of marginal utility, marginalists, following the
  • negatives such as pollution. Marginal cost is an economic concept that measures the cost of an additional unit. The marginal abatement cost, in general
  • In microeconomics, marginal revenue MR is the additional revenue that will be generated by increasing product sales by one unit. In a perfectly competitive
  • In economics, the marginal product of labor MPL is the change in output that results from employing an added unit of labor. It is a feature of the production
  • of return Marginalism Marginal concepts Keynes, John Maynard The General Theory of Employment, Interest, and Money 1936 p 135. Marginal Efficiency
  • use of the Hessian matrix is required. Marginal concepts Marginal rate of technical substitution the same concept on production side Indifference curves