LESSON 3 MARGINALISM How do you know when

LESSON 3 MARGINALISM How do you know when one more is too much? 3 -1 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM Marginal utility is the extra value or additional satisfaction a consumer obtains from consuming one additional unit of output. 3 -2 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM Diminishing marginal utility is when the additional satisfaction or marginal utility associated with consuming additional units of the same product in a given amount of time eventually declines. 3 -3 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM Marginal analysis is a decision-making tool for comparing the additional or marginal benefits of a course of action to the additional or marginal costs. 3 -4 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM Glove Production Table Number of Workers (1) Number of Gloves Produced (2) (3) (4) 3 -5 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY (5)

LESSON 3 MARGINALISM Marginal product is the additional output produced by each successive unit of an input. 3 -6 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM The law of diminishing returns states that as more units of a variable input are added to one or more fixed inputs, eventually the number of additional units of output produced will begin to fall. 3 -7 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY

LESSON 3 MARGINALISM Marginal cost is the increase in a producer’s total cost when it increases its output by one unit. 3 -8 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY