In marginal analysis, which definition best describes marginal benefit?

• A. The difference between average total cost and average variable cost at a given output level
• B. The total benefit received from consuming all units of a good or service
• C. The additional benefit received from consuming or producing one more unit of a good or service, holding other factors constant
• D. The additional cost incurred from consuming or producing one more unit of a good or service

Answer: (C)

Verified step by step guidance

1. Understand that marginal analysis focuses on the changes that occur when one additional unit of a good or service is consumed or produced.
2. Recall that marginal benefit refers to the extra benefit or satisfaction gained from consuming or producing one more unit, while holding other factors constant.
3. Differentiate marginal benefit from total benefit, which is the sum of benefits from all units consumed or produced, not just the additional one.
4. Recognize that marginal cost is the additional cost incurred from one more unit, which is different from marginal benefit.
5. Conclude that the best definition of marginal benefit is: the additional benefit received from consuming or producing one more unit of a good or service, holding other factors constant.