Initial Publication Date: August 20, 2014
What should the student get out of this module?
After completing this module, a student should be able to:
- Understand the meaning of the terms "margin" and "marginal".
- Use symbols to represent marginal change.
- Calculate marginal cost.
- Calculate a marginal tax rate.
- Recognize the difference between marginals and averages.
What we don't include on this page
This module does not connect the idea of marginal change with the associated calculus concepts like derivatives.
Why is it difficult for students?
Understanding the margin and marginal analysis is difficult for students for a few reasons.
- Many students will confuse totals with marginals. Stressing that "marginal" is synonymous with "additional" or "incremental" and reviewing everyday examples is helpful. Students can easily relate to the difference between marginal grades (grades earned this semester) and their overall grade point average. Sports examples are also useful. A player's shooting average or batting average can be compared with their shooting or batting in a particular game.
- Students sometimes struggle with the idea that a marginal change can be constant and even zero. For example, when a consumer pays a constant price per unit, marginal cost for the consumer is constant. When a consumer pays a flat fee for unlimited units of a good, marginal cost is zero. Stress these points by asking, "How much do you pay for an additional unit of this good?"
- Students often have difficulty relating marginal change to change in total quantities. We have found that the best way to show this relationship is with numerical and graphical examples.