Social Sciences and History / Unit 13 SSH 1207 short lesson, about 20 seconds
Marginal Analysis and Sunk Costs
Captions available
The idea
Marginal analysis weighs a little more or a little less from the status quo. The law of diminishing marginal utility says additional units of a good yield smaller gains than earlier ones. Sunk costs, spent in the past and unrecoverable, should be disregarded in current decisions.
In practice
The third slice pleases less.
Where people slip
Utility: satisfaction, usefulness or value from consuming.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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