Question

Marginalism principle is used as a tool of analysis in micro economics, give the reason.

Answer 1

Marginalism describes both an economic method of analysis and a theory of value. According to this theory, individuals make economic decisions "on the margin"; that is, value is determined by how much additional utility an extra unit of a good or service provides.

Answer 2

The reason why marginalism principle is used as a tool of analysis in micro economics is as follows:

• Micro economic is analysed and described by marginalism principle.
• This is a theory of economics. By their marginal utility reference, the discrepancy of service and value is explained.
• Human action and rationality, efficient market price and subjective valuation are also explained by marginal development.
• New era has been opened for micro economics by marginalism principle.