In Economics, what is Marginal Benefit?

Question

Is it the Demand curve or Marginal Revenue?

Answer 1

neither....Marginal benefit is the extra satisfaction, or utility, derived from consuming one more quantity of a product.

Answer 2

Increase or decrease in an activity's overall benefit caused by a unit increase or decrease in the level of that activity, all other factors remaining constant.

Answer 3

Marginal Benefit :

Increase or decrease in an activity's overall benefit caused by a unit increase or decrease in the level of that activity, all other factors remaining constant.

Marginal benefit is in the Accounting & Auditing, Economics, Politics, & Society and Planning & Scheduling subjects.

For more details follow the link...

http://william-king.www.drexel.edu/top/p...

Answer 4

These answers are giving you the technical definition of MB but it appears like you want it in a practical context.

The first answer is wrong.  You don't have to draw in a utility curve to be able to talk about MB and seldom does an intro to micro class even do so.  In fact, MB can be the Demand curve.  It represents the amount of satisfaction or benefit that a consumer gets with an additional quantity consumed.  In the most basic terms, it is the consumer's willingness to pay for a good.  When you look at how it changes with an additional quantity, that's the MB curve and it is commonly traced out with a demand curve in perfectly competitive markets.

When we are dealing with an economy that has no distortions (no taxes, ceilings, floors, or externalities) then marginal benefit IS the demand curve.  Where Demand intersects Supply, MB=MC, and we have both the efficient and equilibrium location as being the same thing.  That's just a special case though and results from when we have perfect competition without distortions.

Remember, efficiency is where MB=MC and equilibrium is where Qty Supplied=Qty Demanded.

If you have a positive externality, MB is broken down into two different curves.  The personal MB (for that firm or agent) is only the MB that person receives.  There's also an external benefit (think about how education provides benefits to that person and also to society).  When you add the external benefit to the MB at ever point, then the line you'll form by connecting the dots is the Marginal Social Benefit curve.  External benefits can be increasing, decreasing, or constant.

Finally, I think your ultimate question deals with a monopolistic situation because the MR curve is different from the Demand curve in a monpolistic or oligopolistic market.  Technically, we don't talk about MB with monopolistic situations.  Here's some insight to it, though...

Recall how to find the monopolistic quantity-price situations compared to the competitive situations.  Where MR=MC, you go down to the Qty axis and that gives you the amount the monopolist wants to produce.  You go up to the demand curve and then over to the price axis to get the price the monopolist will charge.  At that point, profits are maximized.  You cannot maximize the difference of TR-TC by producing more or less.  

Unfortunately, the monopolist underproduces because the competitive firm selects where Demand intersects MC.  As a result, the monopolistic equilibrium quantity is not the same as the efficient equilibrium quantity where the competitive firm locates.  We have decreased efficiency (DWL).  Another way of thinking about it is to draw in CS and PS before and after.  See how the surpluses change.  There will be less total surplus, which is the key to there being inefficiency.

As you may have deduced, the argument still uses the Demand curve as a reference for the MB level but, like I wrote earlier, it's not common to talk about it in that way for a monopolist.  You have to clarify that you refer to the MB of the entire society.  Otherwise, somebody might confuse it as the MB of the monopolist.