Which description best captures the idea of marginal thinking?

• A. Making decisions based solely on past experiences.
• B. Evaluating the additional benefits and costs of a decision before taking action.
• C. Comparing total costs and total benefits of all available options.
• D. Choosing the option with the lowest average cost.

Answer: (B)

Verified step by step guidance

1. Understand that marginal thinking involves analyzing the impact of small, incremental changes in decision-making.
2. Recognize that it focuses on comparing the additional (marginal) benefits and additional (marginal) costs of a decision rather than total or average values.
3. Identify that marginal benefits are the extra benefits gained from consuming or producing one more unit of a good or service.
4. Identify that marginal costs are the extra costs incurred from consuming or producing one more unit of a good or service.
5. Conclude that marginal thinking means making decisions by evaluating whether the marginal benefits outweigh the marginal costs before taking action.