Notes
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Marginal analysis is a comparison of the additional benefits of an activity and the additional costs incurred.
- Marginal cost/benefit is an incremental increase in the expense/consumer's benefit a company incurs to produce one additional unit of something.
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Such analysis only considers the benefits of a unique activity in a complex system. In other words, how one variable affects the whole system.
- You don't focus on the business output as a whole.
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Companies use marginal analysis as a decision-making tool.