The idea of marginal analysis is quite simple: If the marginal benefit from another unit of some activity exceeds the marginal cost of that unit, you should undertake that extra unit of the activity. If the marginal benefit of the extra unit is less than the extra cost of that unit, do not take on the extra unit. (As a rule of thumb, if the marginal benefit and marginal cost of an extra unit are equal, economists say go ahead with that unit.)
This lesson gives students some experience working with marginal analysis. Stress to students that they need to be clear in their answers about the difference between a “marginal” value (such as marginal benefit or marginal cost) and a “total” value (such as total benefit or total cost). This distinction makes a big difference in how well a student performs on the AP microeconomics exam.
This lesson is available on EconEdLink: http://www.econedlink.org/teacher-lesson/1365/AP-Microeconomics-Marginal-Analysis