22. Marginal Decision Analysis
A nickel ain’t worth a dime anymore.
—YOGI BERRA
One way that economists consider decision behavior is by marginal analysis. In marginal analysis, decision makers don’t make decisions based on the averages of an action, but rather on the cost and benefit of the next unit.
As an example, say I need three gallons of ice cream for an ice cream party I am throwing to celebrate publishing a book on game design. I can go to my local supermarket and buy a gallon of ice cream for $5. Or I can go to a warehouse club and buy a 5-gallon vat of ice cream for $16. Which should I buy?
The economist would say I should go to the supermarket and buy three 1-gallon containers for $15; a fourth and fifth marginal gallon have no value ...
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