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law of marginal benefit

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MOHIT PANCHAL
MOHIT PANCHAL

Marginal benefit is the additional satisfaction received from consuming one more unit of a good or service. It decreases as consumption increases due to the law of diminishing marginal benefit. For example, a consumer may be willing to pay $10 for an additional burger when hungry, but less for each successive burger as their hunger decreases. While the consumer's willingness to pay is the marginal benefit, the actual price is determined by market forces.

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LAW OF MARGINAL BENEFIT BY: MOHIT PANCHAL 15001515006 MCRM 1ST YEAR
WHAT IS MARGINAL BENEFIT ? The additional satisfaction or Benefit that a person receives from consuming an additional unit of a good or service. A person's marginal Benefit is the maximum amount they are willing to pay to consume that additional unit of a good or service. In a normal situation, the marginal Benefit will decrease as consumption increases.
BREAKING DOWN MARGINAL BENEFIT For example, assume there is a consumer wishing to purchase an additional burger. If this consumer is willing to pay $10 for that additional burger, then the marginal Benefit of consuming that burger is $10. The more burgers the consumer has, the less he or she will want to pay for the next one. This is because the Benefit decreases as the quantity consumed increases. It is important to note that even though the consumer is willing to pay $10 for the burger , this will not necessarily be the burger's price; this is determined by market forces. The difference between the market price and the price the consumer is willing to pay is called consumer surplus.
Lawof Diminishing Marginal Benefit Law of Diminishing Marginal Benefit - eventually, a point is reached where the marginal Benefit obtained by consuming additional units of a good starts to decline, ceteris paribus.
Lawof Diminishing Marginal Benefit Example If Im really hungry, I get a lot of satisfaction from first slice of pizza. If I keep eating pizza, the satisfaction from the 8th slice would be much less than that of the first slice.
Law of Diminishing MB Notes about the Law of Diminishing MB Time period must be specified for law. Law tells us that eventually the marginal Benefit curve will be downward sloping. Law tells us that eventually the total Benefit curve will become flatter. Slope of the total Benefit curve is equal to marginal Benefit
Marginal Benefit MB Q MU
Shapeof MB Eventually downward sloping Law of diminishing marginal Benefit Positive always Rational behavior Consumer only purchases a good if they get some positive Benefit from it.
Total Benefit TU Q TU DTU DQ DTU DQ

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law of marginal benefit

  • 1. LAW OF MARGINAL BENEFIT BY: MOHIT PANCHAL 15001515006 MCRM 1ST YEAR
  • 2. WHAT IS MARGINAL BENEFIT ? The additional satisfaction or Benefit that a person receives from consuming an additional unit of a good or service. A person's marginal Benefit is the maximum amount they are willing to pay to consume that additional unit of a good or service. In a normal situation, the marginal Benefit will decrease as consumption increases.
  • 3. BREAKING DOWN MARGINAL BENEFIT For example, assume there is a consumer wishing to purchase an additional burger. If this consumer is willing to pay $10 for that additional burger, then the marginal Benefit of consuming that burger is $10. The more burgers the consumer has, the less he or she will want to pay for the next one. This is because the Benefit decreases as the quantity consumed increases. It is important to note that even though the consumer is willing to pay $10 for the burger , this will not necessarily be the burger's price; this is determined by market forces. The difference between the market price and the price the consumer is willing to pay is called consumer surplus.
  • 4. Lawof Diminishing Marginal Benefit Law of Diminishing Marginal Benefit - eventually, a point is reached where the marginal Benefit obtained by consuming additional units of a good starts to decline, ceteris paribus.
  • 5. Lawof Diminishing Marginal Benefit Example If Im really hungry, I get a lot of satisfaction from first slice of pizza. If I keep eating pizza, the satisfaction from the 8th slice would be much less than that of the first slice.
  • 6. Law of Diminishing MB Notes about the Law of Diminishing MB Time period must be specified for law. Law tells us that eventually the marginal Benefit curve will be downward sloping. Law tells us that eventually the total Benefit curve will become flatter. Slope of the total Benefit curve is equal to marginal Benefit
  • 8. Shapeof MB Eventually downward sloping Law of diminishing marginal Benefit Positive always Rational behavior Consumer only purchases a good if they get some positive Benefit from it.

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