In the following examples state how you would use the principle of marginal
In the following examples state how you would use the principle of marginal analysis to make a decision.a. Deciding how many days to wait before doing yourlaundryb. Deciding how much library research to do before writingyour term paperc. Deciding how many bags of chips to eatd. Deciding how many lect…
a) In waiting an extra day, you make a decision based on thedifference between the marginal cost (MC) and marginal benefit(MB). In this case the MC is the use of time and resources such asdetergent while the MB is clean clothes. If the benefit of cleanclothes outweighs your use of time and the cost of the detergentthen you will choose to wash your clothes; if the MB does notoutweigh the MC then you will not wash your clothes. b) Doing library research has a marginal benefit and marginalcost, the benefit is extra information and deeper understanding ofthe topic to write the paper, while the cost of the research islost time in actually writing the paper. If your research is notsufficient enough to write a cohesive paper then you will choose todo more research, in essence the MB of research is greater than theMC of performing the task. The opposite would be true if you hadenough research, at which point the MC would be greater than the MBand it would be more beneficial to write the paper. c) The MB of eating an extra bag of chips is the utility orsatisfaction gained from eating the bag of chips, while the MC isthe cost of an additional bag of chips. If an additional bag ofchips gave you satisfaction beyond…
the cost of that bag then youwould be gaining value marginally (MB-MC> 0), therefore makingthis the best decision. However, if the MC of the next bag of chipswas greater than the satisfaction of eating it, then you would losevalue marginally (MB-MC< 0). d) The marginal value of skipping a lecture is the leisuretime gained during the period of that lecture, however, the MC isthe loss of information for the final during the lecture skipped.If your value of leisure time is greater than the value of theinformation lost (MB> MC) for the following lecture, then youwould benefit from skipping it. However, if you had already skippedmany lectures and the cost of missing the next lecture was higherthan the benefit of leisure time (MC>MB), then you would losevalue marginally if you skipped that lecture.
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