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by Foundation for Economic Education

1. What does it mean to “make a decision at the margin?”

2. Explain the concept of marginal utility. Do you think donuts have increasing or decreasing marginal utility?

3. How does thinking at the margin help entrepreneurs make better decisions?

EoE: 3.2.B - Thinking on the Margin

Why are diamonds more expensive than water? Prof. Mario Villarreal-Diaz answers this question using what economists call marginal analysis. Essentially, the marginal utility of water decreases faster than the marginal utility of diamonds. Put another way, people face decisions in a particular context and time. In modern economies, people have ready access to water on the margin, but do not have the same level of access to diamonds. This video is included as part of a 40-lesson course on the Economics of Entrepreneurship available now for teachers and students at no charge at FEE.org/Courses.

from Thinking at the Margin by Learn Liberty (2016)
Creator: Learn Liberty
Posted by Foundation for Economic Education
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