The marginal utility curve shows how marginal utility depends on the quantity of a good or service consumed.

• The term marginal utility refers to a good or service is the change in total utility generated by consuming one additional unit of that good or service.

Even at an all-you-can-eat buffet, when the cost of another clam is measured solely in future indigestion, the concept of declining marginal value explains why most individuals eventually reach a limit. Under ideal circumstances, notwithstanding, consuming more of an item costs some additional resources, and consumers must consider this cost when making decisions.

In theory, whether or not a consumer's consumption options include a certain expenditure package is regulated by the consumer's income and the costs of goods and services.

A positive economic profit means that the current utilization of resources is the most efficient. A negative economic profit shows that resources could be better used in another way. A 0% economic profit indicates that the company's resources could not be better used in any other activity. A normal profit is another name for a zero-profit economic situation. A company that makes a normal profit is considered to be successful.

The principle of marginal analysis tells us when to stop doing something: keep going until marginal gain equals marginal expense. Consider the effect of increasing output by one unit on a producer's profit to apply this idea.

The optimal output rule asserts that profit is maximized by generating the amount at which the marginal revenue of the last unit produced equals its marginal cost.

The implicit cost—benefits forgone in the next best use of the firm's resources—as well as the explicit cost in the form of real cash outlays are both included in the calculation of economic profit. Accounting profit, on the other hand, is profit determined only by the firm's explicit costs.

This illustrates the impression that, unlike accounting profit, economic profit includes the opportunity cost of resources owned by the firm and utilized in the generation of output. It's critical to realize that a company's long-term decision to create or not produce, to stay in business, or to fold down permanently, should be based on economic profit rather than accounting profit.

• The term of the firm’s production function refers to the quantity of output a firm produces depending on the number of inputs.

Firms can modify the quantity of any input over a long enough period of time. The long-run is defined by economists as the time period during which all inputs can be changed. In the long run, there are no set inputs.