ECON 1000 Lecture Notes - Lecture 5: Marginal Cost, Marginal Utility, Problem Set

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Xianghong Li

Document Summary

Benefit: what you gain: the benefit of something is the gain or pleasure that it brings and is determined by preferences by what a person likes and dislikes and the intensity of those feelings. But you would give up only an itunes download for a slice of pizza. You can allocate the next hour between studying and instant messaging your friends, but the choice is not all or nothing. You must decide how many minutes to allocate to each activity. To make this decision, you compare the benefit of a little bit more study time with its cost you make your choice at the margin. The benefit that arises from an increase in an activity is called marginal benefit. For example, your marginal benefit from one more night of study before a test is the boost it gives to your grade. Your marginal benefit doesn"t include the grade you"re already achieving without that extra night of work.