Enter the initial and final benefit and the initial and final quantities into the calculator. The calculator will evaluate and display the marginal benefit.
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Marginal Benefit Formula
The following equation can be used to calculate the marginal benefit of a good or service.
MB = (B1 – B0) / (Q1 – Q0)
- Where MB is the marginal benefit
- B1 and B0 are the final and initial benefits respectively
- Q1 and Q2 are the final and initial quantities respectively
To calculate the marginal benefit, divide the change in benefit by the change in quantity.
Marginal Benefit Definition
The marginal benefit of a good is the change in monetary benefit that an item generates with a change in quantity. Analyzing the marginal benefit is useful because the relationship between monetary benefit and total quantity sold isn’t always linear.
Marginal Benefit Example
How to calculate a marginal benefit?
- First, determine the initial and final benefits.
Measure the relative initial and final monetary benefits of the product.
- Next, determine the initial and final quantities.
Measure the initial and final quantities of the product.
- Finally, calculate the marginal benefit.
Use the equation above to calculate the marginal benefit.
FAQ
A marginal benefit is a relationship between monetary benefits or revenue and the amount of product sold. The relationship is not always perfectly linear, so calculate a marginal benefit can help analyze the relationship further.
