Margin (economics)

This article concerns a concept of economic theory. For discussion of the term “margin” as used in the jargon of bourses, see “Margin (finance)”.

In economics, a margin is a set of constraints conceptualised as a border.^[1] A marginal change is the change associated with a relaxation or tightening of constraints — either change of the constraints, or a change in response to this change of the constraints.^[1]

Extensive and intensive margins

Margins are sometimes conceptualized as extensive or intensive:

• An extensive margin corresponds to the number of usable inputs that are in some sense employed. For example, hiring an additional worker would increase an extensive margin.
• An intensive margin corresponds to the amount of use extracted within a given extensive margin. For example, reducing required production from a given set of workers would decrease the intensive margin.

See also

• Marginalism
• Marginal utility

References