How to Calculate a Marginal Benefit

Money

Marginal benefit, according to the Environmental Literacy Council, is "a measurement of the change in benefits over the change in quantity." A business or an individual can measure a marginal benefit by tracking how much a consumer is willing to pay for a product. Calculating a marginal benefit helps the person or company offering the product to make decisions concerning production and budgeting.

Instructions

1. Identify the actual price of a certain commodity. For instance, if a cup of coffee costs a company 50 cents to make and package, that value is the actual price.

2. Identify consumer surplus. This is the amount beyond the actual price that a customer is willing to pay for the item. For instance, a customer may be willing to pay $2.50 beyond the actual price for the cup of coffee.

3. Add the actual price to the consumer surplus to find the marginal benefit. Because 50 cents added to $2.50 equals $3.00, the marginal benefit of the coffee to the customer is $3.00.

References

• The Environmental Literacy Council: Marginal Costs & Benefits
• Investopedia: Marginal Benefit and Marginal Cost