Let’s consider an example to understand the detailed study of marginal cost and marginal benefit. The easiest example to portray the same is how much shall a student study for an examination.

You will call and message your friends on how will you organize your study time and how many minutes to give to a subject. But how will you really conclude to a decision? The answer is choice at your margin.

Margin benefit: It is entitled as the benefits you will receive if you study for one extra night. Benefits can include better grades and scores in your semester that you will achieve by studying for one more night and not the scores which you are already achieving.

Marginal cost: The cost for you under this situation will be cost of not spending on other activities that you might have, if you wouldn’t have opted for extra studies.

Your decision: If marginal cost surpasses marginal benefit, you won’t study for an extra night or evening. If the marginal benefit or advantage exceeds marginal costs, you will study for an extra night.


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