Margin (economics)

Within economics, margin is a concept used to describe the current level of consumption or production of a good or service.^[1] Margin also encompasses various concepts within economics, denoted as marginal concepts, which are used to explain the specific change in the quantity of goods and services produced and consumed. These concepts are central to the economic theory of marginalism.^[1] This is a theory that states that economic decisions are made in reference to incremental units at the margin,^[2] and it further suggests that the decision on whether an individual or entity will obtain additional units of a good or service depends on the marginal utility of the product.^[3]

These marginal concepts are used to theorise various market behaviours and form the basis of price theory. It is a central idea within microeconomics and is used to predict the demand and supply of goods and services within an economy.^[4]

^ ^a ^b Marginalism Definition. Investopedia. (2022). Retrieved 12 April 2022, from https://www.investopedia.com/terms/m/marginalism.asp#:~:text=Marginalism%20is%20the%20economic%20principle,buying%2C%20selling%2C%20etc.).
^ Reading: Marginal Utility | Microeconomics. Courses.lumenlearning.com. (2022). Retrieved 12 April 2022, from https://courses.lumenlearning.com/suny-microeconomics/chapter/marginal-utility/.
^ Stiglitz, J. (2000). The Contributions of the Economics of Information to Twentieth Century Economics. The Quarterly Journal Of Economics, 115(4), 1441–1478. https://doi.org/10.1162/003355300555015.
^ Theory of Price Definition. Investopedia. (2020). Retrieved 22 May 2022, from https://www.investopedia.com/terms/t/theory-of price.asp#:~:text=Key%20Takeaways-,The%20theory%20of%20price%20is%20an%20economic%20theory%20that%20states,reasonably%20consumed%20by%20potential%20customers.

[investopedia1-1] Marginalism Definition. Investopedia. (2022). Retrieved 12 April 2022, from https://www.investopedia.com/terms/m/marginalism.asp#:~:text=Marginalism%20is%20the%20economic%20principle,buying%2C%20selling%2C%20etc.).

[utility-2] Reading: Marginal Utility | Microeconomics. Courses.lumenlearning.com. (2022). Retrieved 12 April 2022, from https://courses.lumenlearning.com/suny-microeconomics/chapter/marginal-utility/.

[stiglitz-3] Stiglitz, J. (2000). The Contributions of the Economics of Information to Twentieth Century Economics. The Quarterly Journal Of Economics, 115(4), 1441–1478. https://doi.org/10.1162/003355300555015.

[4] Theory of Price Definition. Investopedia. (2020). Retrieved 22 May 2022, from https://www.investopedia.com/terms/t/theory-of price.asp#:~:text=Key%20Takeaways-,The%20theory%20of%20price%20is%20an%20economic%20theory%20that%20states,reasonably%20consumed%20by%20potential%20customers.

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