Marginalism

Marginalism is an economic theory that focuses on the importance of incremental changes in decision-making. It examines how individuals and businesses evaluate the additional benefits and costs of a small increase or decrease in an activity, like producing one more product or consuming one more slice of pizza. Instead of looking at total costs and benefits, marginalism emphasizes how each small change influences overall utility and resource allocation. This helps explain behaviors in markets and informs pricing, consumption, and production decisions, guiding people toward maximizing their satisfaction or profit efficiently.