Join TSR now and get all your revision questions answeredSign up now

Decision making at the margin Watch

    • Thread Starter
    Offline

    3
    ReputationRep:
    I don't really know what this concept is. Can anyone point me in the correct direction please? Thank you in advance! :tsr2:
    • Thread Starter
    Offline

    3
    ReputationRep:
    Does no one know?
    Offline

    0
    ReputationRep:
    Try Marginalism

    I am not 100% sure on this but I think basically, people make decisions depending on the relative satisfaction gained or lost (opportunity cost?). So you will buy a tennis ball instead of a golf ball because you enjoying playing tennis more and it gives more satisfaction.

    But there is a problem of diminishing marginal utility as well (i.e. the second tennis ball will give you less satisfaction that the first one) and the fact that problem that money is worth more now that in the future (discounting).
    • Thread Starter
    Offline

    3
    ReputationRep:
    But I thought marginal meant the one unit?
    Offline

    1
    ReputationRep:
    making decisions at the margin... take two different ponds you can fish at, and you want to spread 4 fisherman out the most efficiently. if four people fish at one pond the average product for each is 100 say, and the marginal product is also 100 for each person (i.e. there is no diminishing returns to having an extra person fish there within this range). then take another pond which has an average product of 120, say, for four fishers, though it does exhibit diminishing marginal returns. the first fisher has a marginal product of 200, the second 120, the third 90, the fourth 70. you can either base your dispersal of fishers based upon average product or marginal product, however, if you do decide on the margin, clearly the most efficient setup would be two in the second pond and two in the first, to take avantage of the higher marginal products. even though the average product is higher in the second pond, you don't want to put all your fishermen there if you undertake decision making at the margin.

    that's what i think it means anyway..
 
 
 
Poll
Would you shell out for travel insurance?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.