Marginal Benefit vs. Marginal Cost: What's the Difference?

Marginal benefit and marginal cost are two measures of how the cost or value of a product changes.

• The marginal benefit is a measurement from the consumer side. It is the maximum amount of money a consumer is willing to pay for an additional good or service.
• The marginal cost is a measurement from the producer side. It is the change in cost when an additional unit of a good or service is produced.

A marginal benefit change in a consumer's advantage if they use an additional unit of a good or service.

A marginal benefit usually declines as consumption increases. For example, the consumer may buy one ring for $100, but only willing to buy another if the second ring is $50. The consumer's marginal benefit reduces from $100 to $50 from the first to the second good.