Marginal analysis is a comparison of the additional benefits of an activity and the additional costs incurred.
- Marginal cost/benefit is an incremental increase in the expense/consumer's benefit a company incurs to produce one additional unit of something.
Such analysis only considers the benefits of a unique activity in a complex system. In other words, how one variable affects the whole system.
- You don't focus on the business output as a whole.
Companies use marginal analysis as a decision-making tool.