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Within economics, margin is a concept used to describe the current level of consumption or production of a good or service. [1] Margin also encompasses various concepts within economics, denoted as marginal concepts, which are used to explain the specific change in the quantity of goods and services produced and consumed.
Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water.
marginal product of capital; marginal rate of transformation, the rate at which one output or result must be sacrificed in order to increase another output or result; marginal revenue product; marginal propensity to save and consume; marginal tax rate; marginal efficiency of capital; Marginalism is the use of marginal concepts to explain ...
In statistics, the principle of marginality, sometimes called hierarchical principle, is the fact that the average (or main) effects of variables in an analysis are marginal to their interaction effect—that is, the main effect of one explanatory variable captures the effect of that variable averaged over all values of a second explanatory variable whose value influences the first variable's ...
The law of diminishing returns is a fundamental principle of both micro and macro economics and it plays a central role in production theory. [ 5 ] The concept of diminishing returns can be explained by considering other theories such as the concept of exponential growth . [ 6 ]
This principle is so well established that economists call it the "law of diminishing marginal utility" and it is reflected in the concave shape of most utility functions. [13] This concept is fundamental to understanding a variety of economic phenomena, such as time preference and the value of goods .
where is the marginal benefit to each person of consuming one more unit of the public good, and is the marginal cost of providing that good. In other words, the public good should be provided as long as the overall benefits to consumers from that good are at least as great as the cost of providing it ( public goods are non-rival, so can be ...
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...