What is marginal analysis, and how can it help you make better decisions?
Answer (1)
Marginal analysis is the process of comparing the additional benefits and additional costs of a decision. For example, if a student studies for 1 hour and scores 80 on a test, and an extra hour of study can raise the score to 90, the marginal benefit is 10 more points. But if the student feels tired and can't focus, the marginal cost might be more than the benefit. This kind of thinking helps you balance your efforts. It's used in budgeting time, food portions, even choosing to stay up late or not—when the extra effort isn't worth the cost, it’s time to stop.
