Marginal benefit


Within the concepts of economics, marginal benefit is one of the most key and easy to understand, since it deals with the satisfaction, happiness or pleasure obtained by a person by consuming an additional unit of a good or service; in other words, it is the difference between what a consumer pays for a good or service and the maximum amount that in a daily situation they would be willing to pay. A very clear example of the situation is the following: a man is very hungry, he goes through a fast food establishment, this one has a reasonable budget, but since he is very hungry, he is willing to pay two or three times more than the normal price. Due to the satisfaction that this meal will cause, while the second one will likewise satisfy the individual but not as much as the previous one, then, the point will come where they will be satisfied and if they continue consuming they will not obtain any benefit, so It is evident that the marginal benefit decreases as the additional unit is consumed.

Within the field of economics, its function is vital for the study of the consumer and economic variables. The phenomenon that produces the decrease in marginal benefit according to the increase of the additional units is the product of the increasing satisfaction of the consumer that makes him pay less as said units are increased. There is a close relationship between marginal benefit and consumer surplus, the latter being the difference between what a consumer is willing to pay for a good and service and what the person is actually going to pay for it.

Organizations take into account the marginal benefit at the time of conducting an analysis to find out how much consumers would be willing to pay with respect to their level of satisfaction, so it will help the company to calculate price and production through approximations necessary to meet the goals stipulated by shareholders and managers. In addition, economists use this benefit a lot because it is a useful tool when calculating production and estimating the excess of the consumer and producer that will serve as a guide for the company when estimating its sales.

A determining point for the choice of decisions within organizations in reference to production and sales is that it must be borne in mind that marginal benefit and marginal cost must have a positive difference and thus maximize the efficiency of the company.