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1. LAW OF MARGINAL
BENEFIT
BY: MOHIT PANCHAL
15001515006
MCRM 1ST YEAR

2. WHAT IS MARGINAL BENEFIT ?
• The additional satisfaction or Benefit that a
person receives from consuming an additional
unit of a good or service.
• A person's marginal Benefit is the maximum
amount they are willing to pay to consume that
additional unit of a good or service.
• In a normal situation, the marginal Benefit will
decrease as consumption increases.

3. BREAKING DOWN MARGINAL BENEFIT
•For example, assume there is a consumer wishing to
purchase an additional burger. If this consumer is
willing to pay $10 for that additional burger, then the
marginal Benefit of consuming that burger is $10.
The more burgers the consumer has, the less he or she
will want to pay for the next one. This is because the
Benefit decreases as the quantity consumed increases.
•It is important to note that even though the consumer
is willing to pay $10 for the burger , this will not
necessarily be the burger's price; this is determined by
market forces. The difference between the market
price and the price the consumer is willing to pay is
called consumer surplus.

4. Lawof Diminishing Marginal Benefit
 Law of Diminishing Marginal Benefit -
eventually, a point is reached where the
marginal Benefit obtained by consuming
additional units of a good starts to decline,
ceteris paribus.

5. Lawof Diminishing Marginal Benefit
 Example
• If I’m really hungry, I get a lot of satisfaction from
first slice of pizza.
• If I keep eating pizza, the satisfaction from the 8th
slice would be much less than that of the first slice.

6. Law of Diminishing MB
Notes about the Law of Diminishing MB
 Time period must be specified for law.
 Law tells us that eventually the marginal
Benefit curve will be downward sloping.
 Law tells us that eventually the total Benefit
curve will become “flatter.”
• Slope of the total Benefit curve is equal to marginal
Benefit

7. Marginal Benefit
MB
Q
MU

8. Shapeof MB
 Eventually downward sloping
• Law of diminishing marginal Benefit
 Positive always
• Rational behavior
 Consumer only purchases a good if they get some positive
Benefit from it.

9. Total Benefit
TU
Q
TU
DTU
DQ
DTU
DQ