Marginal Benefit

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Definition of Marginal Benefit:

Marginal benefit is the satisfaction gained from the consumption of an additional unit. Also referred to as marginal utility.

Detailed Explanation:

For consumers the marginal benefit is the satisfaction gained from purchasing an item. For businesses, the marginal benefit is the money, or revenue received from selling the last unit. For example, a pastry store may sell their muffins for $2.00, but during the last hour they are open they may discount them to $1.00 in an effort to sell them faster. The marginal benefit for the final pastry sold would be $1.00. Economists use the term marginal revenue when the marginal benefit is money. Producers will continue to sell a product as long as the revenue they receive is equal or greater than the cost to produce that additional unit (marginal cost).  

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