The most a consumer will spend on an additional good or service is known as the marginal benefit.
What Is Marginal Benefits for Businesses?
- Businesses can use marginal benefits, particularly in the areas of marketing and research. Businesses must take into account the possibility that a customer will weigh the marginal benefits of an additional purchase against its marginal cost.
- A marginal cost is an extra expense incurred when creating a subsequent unit.
- Returning to the earlier example, if a customer purchases the first burger for $10 and a second for $9, they may assign the second burger a marginal benefit of $9 and choose to purchase it given the marginal cost of $9.
- The marginal cost of $9 will outweigh the benefit if the customer orders just one burger, however, in which case they might choose not to purchase it.
- Businesses can use the marginal benefit research they do to determine any deal's best price point.
- Using this research, businesses can also learn how much more it costs to sell a second item in comparison to the first.
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