Margins and Thinking at me Margin What does it mean to think at the margin Another application of marginal

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Margins and Thinking at me Margin 
1. What does it mean to think at the margin 
2. 
Another application of marginal
 
3. Try describing a scenario, an example that uses the marginal 
principle 
Conculation 
What does it mean to think at the margin? It means to think about 
your next step forward. The word “marginal” means “additional.” The 
first glass of lemonade on a hot day quenches your thirst, but the next 
glass, maybe not so much. If you think at the margin, you are thinking 
about what the next or additional action means for you. 
How many additional tomatoes can you get by taking better care of 
your garden? If an hour extra work weeding means you will get 12 
more tomatoes, then one additional hour of work results in 12 
additional tomatoes. Economists sometimes summarize that by saying 
your marginal product of labor is 12. That just means you can get 12 
more tomatoes for one additional hour of work. 
On the flip side of that, you could equally well say that the marginal 
cost of a producing one additional tomato is 5 additional minutes 
(1/12th of an hour) of your labor. Every new tomato costs you another 
five minutes of weeding. As another example, if one additional 
Facebook friend costs you an additional 10 minutes of attention, then 
the marginal cost is 10 minutes of your time per new Facebook friend. 
A bus that is half-empty can take on more riders with zero or very little 
extra cost–perhaps just a few cents more for wear and tear and the cost 

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of gas to haul an extra 150 pounds. Economists would say 
the marginal cost of an additional rider is nearly zero. But, if buses are 
always running packed with lines left standing, then the marginal cost 
of additional riders would be the entire cost of adding another bus. It is 
very common to have to compare different marginal costs for different 
scenarios in order to decide which alternative to pursue. 
When you drive around the block to park your car for a concert or 
event, you can keep driving around the block waiting for that perfect, 
free, on-street parking spot to come available. Or, you can weigh the 
alternative of spending $10 for a paid parking lot spot. What matters is 
what you do in the next minute, ten minutes, hour, or day. 
The marginal cost of finding a parking space could be only $10; or it 
could be another hour of driving around hoping for a free spot to open 
up just as you are in position to grab it. If you already spent an hour 
searching for a great parking spot, you may well do better to let that 
memory go. Thinking at the margin means to let the past go and to 
think forward to the next hour, day, year, or dollar that you expend in 
time or money. What’s better for you now or in the next few minutes? 
If you think at the margin, you are thinking ahead. At some point, if 
you continue to drive around the block again and again with no results, 
an economist would encourage you to think about the future instead of 
bulleting on the past. You can’t change the past, but you can change 
what you do next. (Economists sometimes summarize this by 
saying, “Sunk costs are sunk.”) And in what you do next, you should 
weigh the costs and benefits starting afresh for the next few minutes of 
your time–which is what economists mean when they say, “Think at 

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the margin.” At the margin, you could get a parking spot for $10 or you 
could drive around and maybe get a parking spot for free with a 
probability of, say, 20% in the next hour. Thinking at the margin means 
weighing those future options, and not focusing on what you did in the 
previous hour of frustrating circling around. 
The marginal cost of producing computer chips is the entire cost of 
producing one more computer chip. Producing only one more from 
your existing equipment and workers may entail only a small cost that 
is only an additional few pennies per chip. But if you are already 
maxing out your production, producing even one more may entail 
producing a hundred thousand more. Which in turn may entail building 
a new factory and hiring all its workers, or even researching a whole 
new way to produce chips–perhaps an additional hundred thousand 
dollars, at an average cost of a dollar per additional chip or even an 
additional few million dollars. You have to consider all the additional 
costs for each option before making a decision. Maybe to get just one 
more chip you still have to pay extra to hire an extra worker to work 
the night shift, plus hire someone to stand by to do a little more 
machine maintenance. Maybe paying more overtime for even one more 
worker will mean paying higher taxes or insurance fees, or will entail 
more explanations to other workers about why you can’t offer full 
opportunities for the extra opportunities to everyone. The sum of all 
those additional costs–from wages to insurance to taxes to emotional 
burdens and effects on morale–to produce one more computer chip is 
what economists mean by the marginal cost of a computer chip. You 
can’t add apples to oranges, so you may have to weigh the various 

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costs in different dimensions. See Real, Relative, and Nominal