What describes the additional benefits received when one more unit of a product is produced?

Marginal benefit describes the additional benefits received from producing one more unit of a product. In economics, each time a firm or individual decides to increase production, they evaluate the additional utility gained from consuming an extra unit of the good against the costs incurred. Marginal benefit reflects the maximum amount that a consumer is willing to pay for an additional unit.

For example, if producing an extra pair of shoes provides a retailer with additional profits or an increase in customer satisfaction, this increase is quantified as the marginal benefit. It’s essential to understand this concept because firms aim to produce until the marginal benefit equals marginal cost, ensuring efficient allocation of resources and maximization of total profit.

Other terms like marginal cost refer to the expense of producing one additional unit, opportunity cost represents the value of the next best alternative foregone, and fixed cost pertains to costs that do not change with the level of production. These terms highlight different aspects of economic decision-making but do not capture the specific concept of the additional benefits associated with the production of one more unit.