(And the Role of Government in the Market System) Marginal Analysis (And the Role of Government in the Market System)

Definition Marginal cost (MC) = additional cost from the consumption of the next unit of goods and services Marginal benefit (MB) = additional benefit from the consumption of the next unit of goods and services Marginal equilibrium (MB = MC) = when the costs equal the benefits

Investopedia Investopedia Example: If you exercise 5x a week and want to add a 6th day, you would use marginal analysis to determine whether the benefits of that 6th day (calories burned, endurance gained, muscles built) would be worth the costs (sleep lost, less energy for other activities, increased risk of injury)

Mr. Clifford! Mr. Clifford and the Holy Grail

Marginal Analysis Marginal Analysis

Switch Gears! Market System (with government involvement)

Flowchart (part 2) Using your previous market flowchart, fill in the spaces that you know of The next blank space terms are: Expenditures (2x) <<also called “Government Spending” Goods and Services (3x) Taxes (2x) Resources

HW Find two (2) practice problems (with the answers) so that you can teach the class how to solve them next Thursday on our Practice Problems Day!