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

The concept of marginal benefit refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service. In the context of production, it describes the increase in value or benefits that result from producing one additional unit of a product. When a company decides to increase its production, it evaluates whether the benefits of producing that extra unit exceed the costs involved. This evaluation is crucial for making informed economic decisions because it helps to determine the optimal level of production that maximizes profit or utility.

Understanding marginal benefit is essential for firms in competitive markets, as they must assess how much additional revenue will be generated against the costs incurred. This decision-making process allows businesses to adjust their output to achieve efficiency and profitability.

In contrast, marginal cost relates to the change in total cost when one more unit is produced, while opportunity cost measures the loss of potential gain from other alternatives when one option is chosen. Fixed costs remain constant regardless of the level of production, making them irrelevant to the concept of additional benefits derived from one more unit produced.