What is the relationship between marginal benefits and marginal costs?

marginal benefits and marginal costs are related to several key ways in production and production, investment and consumption. The limit cost (MC) is the cost of the last or consumed unit and the limit advantage is the usefulness of the last unit. The marginal benefits and marginal costs are economic principles that businesses and consumers use to maximize their usefulness. In both groups, this usually means producing or consuming until these two values ​​are the same to each other. The limit costs are production costs for the last units or a change in costs divided by a change of quantity. Businesses generally operate to maximize their profits, and rarely, if at all, will produce goods when the output costs exceed the benefits they receive.

Marginal The advantage for consumers is the usefulness that they get from the consumption of the last unit, which is often the maximum price that they would be willing to pay for this unit. MC, on the other handLady on this next unit. People will generally consume until their marginal benefits and marginal costs are equal to each other.

An example of this balance between marginal benefits and marginal costs would be customers in a donut store. While the first donut is likely to stand for the customer, at the cost or usefulness and happiness, it is likely that the seventeenth donut consumed will create negative usefulness and misfortune in addition to additional costs. The second donut can also increase usefulness, but by less than the first. Customers will eat donuts until they are full, at this point they will no longer gain usefulness from other donuts.

The price that the taxable is willing to pay for another donut will be reduced because consumers more donuts. Shops often realize about this fact and offer additional donuts for price reduction, reducing marginal costs to meet the marginal advantage thatCustomers receive special consumption. If the limit costs exceed the marginal advantage, customers will not be willing to pay these costs. On the other hand, if customers are willing to pay more than real costs, it is known as a consumer surplus.