Marginal Benefit vs. Marginal Cost
Marginal benefit and marginal cost are two measures of how the cost or value of a product changes.
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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.
Producers consider marginal cost, which is the small but measurable change in the expense to the business if it produces one additional unit.
In producing a product, efficiency in productivity can result in making more products in the same amount of time. The cost of raw materials may also go down if it is purchased in bulk, therefore, decreasing the marginal cost.
The law of comparative advantage was first mentioned in 1817 by English economist David Ricardo.
A company has a comparative advantage when it is able to provide a good or service at a lower opportunity cost than others, helping it sell the same product at a lower cost, resulting in better margins.
Contagion, in financial terms, refers to the diffusion of economic booms, and can occur both domestically and globally. It is basically a spread of an economic crisis from one region to another, and spreads on an international level due to the global market interdependence.
The term contagion was coined during the 1997 Asian financial crisis, but it was occurring namelessly even during the Great Depression in the 1930s.
A financial crisis is often associated with a panic or a bank run where investors sell off assets or withdraw money from savings accounts.
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