margeanalyses

Marginal analysis is a method used in economics and decision theory to evaluate the consequences of small, incremental changes. By focusing on the additional costs and benefits of a proposed action, it helps determine whether the action should be undertaken. It is central to optimization under constraints. The standard term is marginal analysis; "margeanalyses" is an uncommon variant.

The key concepts are marginal cost, the increase in total cost from producing one more unit, and marginal benefit, the additional benefit from that unit. A decision is typically optimal when marginal benefit equals marginal cost, or when MB exceeds MC until equality is approached.

Applications include consumer choices under a budget, firms deciding output and prices, and public policy evaluation through cost-benefit analysis. Marginal analysis guides resource allocation by comparing incremental benefits and costs rather than total levels.

Historically, marginal analysis traces to marginal utility theory in the late 19th century, associated with Jevons, Menger, and Walras, and was formalized in Marshallian partial equilibrium analysis. It remains foundational across economics and business.

Limitations include assumptions of rational behavior, stable preferences, and sufficient information. Real-world decisions involve multiple objectives, uncertainty, and externalities that simple MB=MC comparisons may not capture. Dynamic or interdependent settings may require broader methods.