Question

You need to understand the relationship between the following marginals and associated averages:

• marginal product of labor & average product of labor
• marginal cost & average total cost
• marginal cost & average variable cost

Think about the relationship between marginals and averages for something you are already familiar with: your grades. Think of your GPA (that's your average grade). Answer the following questions.

1. What is your current GPA?
2. What happens to your GPA if you fail this course?
3. What happens to your GPA if you make an A in this course?
4. What's another example in your life where you are making your decisions on the margin (using marginal thinking rather than average or total)?

Answer 1

My current GPA : 8.9

If i fail this course: My GPA will fall down if i fail this course, as the total sum of grades would reduce on an average

If i score an A: My GPA will increase if i score an A in this course, as the total sum of grades would increase

Another decision made on the margin is decision to buy food. That is, how many burgers one decides to buy when he is hungry. This decision is made on the margin, as the individual compares the price paid per burger to the benefit derived from consuming the additional burger.