Marginal Analysis
By Charlene Diep
Start
Marginal Analysis
As a college student with a part time job, I get stressed out pretty often. Since most of my needs are already met, I use some of my money to do activities or buy goods that bring me joy.
- I decide on how much money I should spend on the beginning of each month in order to get the most satisfaction and use out of my money keeping my guilt to a minimum
Variables and Factors in a Model
COSTS: How much guilt I feel after spending money BENEFITS: How much utility or happiness I get from leisure activities and items
DECISION: how much money I should spend on leisure and my enjoymentSCARCE RESOURCE: The money I get from my part time job
*Leisure and enjoyment is defined as ANYTHING I spend money on as all of my needs (such as food, gas, school expenses, etc.) have been met and anything I buy is considered a want.
Marginal Cost: The added cost of feeling guilt after spending money
Model of Marginal Analysis Decision
Marginal Benefit The Marginal Benefit decreases as money spent increases assuming that the more money spent on leisure, there is ALWAYS less satisfaction is gained
Marginal Cost The Marginal Cost continues increasing assuming that guilt ALWAYS increases with the increasing amount of money spent
Marginal Benefit: The added benefit of spending money
*Assuming that both slopes are equal numbers but opposite signs
The Optimal Choice
The optimal choice is to spend $200 on leisure activities where MB is equivalent to MC
The surplus shown in the model is how much better off I (the economic agent) am for choosing to spend at most $200 on leisure
For every dollar spent, the guilt increases while the happiness or satisfaction levels decreases
Shift of Marginal Analysis
Further down the line, my paycheck at my part time job starts to decrease as a result of focusing on school and cutting hours. That would increase the slope of my marginal cost sharply, as I feel more guilt for spending more money when I do not have the same amount of income. The marginal cost would shift inwards (increase) and my surplus would decrease
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Marginal Analysis- Charlene Diep ECON 2022-003
Charlene Diep
Created on March 1, 2026
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Transcript
Marginal Analysis
By Charlene Diep
Start
Marginal Analysis
As a college student with a part time job, I get stressed out pretty often. Since most of my needs are already met, I use some of my money to do activities or buy goods that bring me joy.
Variables and Factors in a Model
COSTS: How much guilt I feel after spending money BENEFITS: How much utility or happiness I get from leisure activities and items
DECISION: how much money I should spend on leisure and my enjoymentSCARCE RESOURCE: The money I get from my part time job
*Leisure and enjoyment is defined as ANYTHING I spend money on as all of my needs (such as food, gas, school expenses, etc.) have been met and anything I buy is considered a want.
Marginal Cost: The added cost of feeling guilt after spending money
Model of Marginal Analysis Decision
Marginal Benefit The Marginal Benefit decreases as money spent increases assuming that the more money spent on leisure, there is ALWAYS less satisfaction is gained
Marginal Cost The Marginal Cost continues increasing assuming that guilt ALWAYS increases with the increasing amount of money spent
Marginal Benefit: The added benefit of spending money
*Assuming that both slopes are equal numbers but opposite signs
The Optimal Choice
The optimal choice is to spend $200 on leisure activities where MB is equivalent to MC
The surplus shown in the model is how much better off I (the economic agent) am for choosing to spend at most $200 on leisure
For every dollar spent, the guilt increases while the happiness or satisfaction levels decreases
Shift of Marginal Analysis
Further down the line, my paycheck at my part time job starts to decrease as a result of focusing on school and cutting hours. That would increase the slope of my marginal cost sharply, as I feel more guilt for spending more money when I do not have the same amount of income. The marginal cost would shift inwards (increase) and my surplus would decrease
Thank you For Viewing