Critical Analysis and Marginal Decision-Making

Nyan Lin Htut

Department of Business Management, University of the People

BUS 1103 - Microeconomics

Mrs. Kristine Beaird (Instructor)

Word Count: 695 words

February 7, 2024
Plant-Based Milk Alternatives in Coffee Shops – Critical Analysis and Marginal Decision-

Making

Marginal analysis is the process of examining the added value or benefits of a particular service

compared to the cost of that service. The definition of marginal analysis indicates that the

analysis examines the costs and benefits of purchasing one more unit of a good or service,

represented by a marginal period. It can also be used to analyze the costs and benefits of adding

additional business activities to production. These additional units are often called control

variables, which are inputs or outputs that change by one unit. It is used by business strategists to

determine whether the potential benefits of complementary business activities are sufficient to

cover the costs of complementary activities and to anticipate profits. In a corporate environment,

the use of marginal analysis is essential to properly allocate resources and invest in profits that

maximize returns.

Marginal analysis can assist me in different ways in deciding about offering plant-based milk

alternatives in my coffee shop. I can see the additional income and expenses associated with

providing plant-based dairy alternatives. These include factors such as the costs of purchasing

and storing replacement milk, potential price adjustments and the impact on sales volumes. It

can also help me to estimate the increase in customer satisfaction and loyalty that may result

from offering these alternatives. This can be done through surveys or by analyzing customer

feedback. You can weigh the benefits and additional costs to determine if the potential revenue

and customer satisfaction outweigh the additional costs. If the marginal benefits outweigh the

marginal costs, introducing plant-based milk alternatives may be beneficial.

The law of diminishing marginal utility definition states that as a person consumes more of a

good or a service, the marginal utility from each additional unit of that good or services declines.

This law can apply to consumption of the same goods or services or of different goods or

services. It is helpful to understand this concept when it comes to analyzing issues with the

traditional supply and demand model. When evaluating the trade-offs and benefits associated

with offering plant-based milk alternatives, you would consider how customer demand for these

options may change over time. Initially, the introduction of plant-based milk alternatives may

attract new customers and increase customer satisfaction. However, as more customers switch to

these alternatives, the incremental benefit of offering them may decrease. To assess feasibility, I

would analyze factors such as the potential market demand for plant-based milk alternatives, the

cost of sourcing and preparing these options, and the impact on overall customer satisfaction. By

considering diminishing marginal utility, I can determine whether the benefits of offering these

alternatives outweigh the costs in the long run.

One real-life situation where I utilized marginal analysis was when deciding whether to take on

an additional part-time job. At the time, I was already working a full-time job and considering

taking on a part-time job to earn some extra income. I conducted a marginal analysis by

considering the additional benefits and costs that would come with taking on the part-time job.

The benefits included the extra income, which would help me save for a vacation, and the

opportunity to gain new skills and experiences. The costs included the additional time and

energy required, which could potentially lead to burnout and affect my performance in my full-

time job. By conducting a marginal analysis, I was able to weigh the benefits and costs of taking

on the part-time job. I considered how much extra income I would earn, how much time and
energy it would require, and how it would impact my overall well-being and performance in my

full-time job. Ultimately, after considering the marginal benefits and costs, I decided to take on

the part-time job. The extra income outweighed the costs, and I believed that I could manage my

time and energy effectively to prevent burnout.

Overall, marginal analysis is a valuable tool for decision-making, whether in a business context

like offering plant-based milk alternatives or in personal situations like taking on additional

responsibilities. It enables you to assess the incremental benefits and costs, leading to more

informed and rational decision-making.

 REFERENCES

 Sarah Sagal (2023,11) , what is marginal analysis and the marginal analysis definition,

Study.Com https://study.com/learn/lesson/what-is-marginal

 Shapiro, D., MacDonald, D., Greenlaw, S. A., Dodge, E., Gamez, C., Jauregui,

Andres., Keenan, D., Moledina, A., Richardson, C., & Sonenshine, R. (2023).

Principles of microeconomics (3rd ed.). OpenStax. Licensed under CC 2.0