What is Marginal Analysis? 

Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. 

Examples: Companies use marginal analysis as a decision-making tool to help them maximize their potential profits. Marginal refers to the focus on the cost or benefit of the next unit or individual, for example, the cost to produce one more widget or the profit earned by adding one more worker.

Here is a Khan Academy on Marginal Analysis. Khan Academy is a really great resource, some classrooms in high school are flipped classrooms and this is a great video for that type of learning. 

Here is another great video that is more interactive and could be more interesting for the students to watch, but also covers a good baseline of what Marginal Analysis really is. I highly recommend this video. 

Background Knowledge: 

With some topics such as marginal analysis is it beneficial to learn some overarching themes in economics to learn a few overarching topics.

Microeconomics: the part of economics concerned with single factors and the effects of individual decision

Focus Question: How do businesses use marginal analysis?

Click here to learn what marginal analysis is.

Marginal Revenue (MR) equals the price of the good in competitive firms
Change in MR= Change in Total Revenue (TR)/ Change in Output (Q)

A firm's Marginal Cost curve determines how much the firm is willing to supply at any price, it is the competitive firm's supply curve

• If Marginal Revenue exceeds marginal cost, the firm should increase output to increase profit
• If Marginal Cost exceeds marginal revenue, the firm should decrease output to increase profit
• At the profit-maximizing level of output, Marginal Revenue and Marginal Cost are exactly equal

Source:
Gregory Mankiw, Principles of Microeconomics, 4th edition