Equi-marginal principle: how is this cost-minimization?

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The equi-marginal principle is a cost-minimization strategy that states that if a certain amount of money must be spent, but it can be allocated to different investments, the optimal allocation is the one in which the marginal benefit of each item is equal. This is a cost-minimization strategy because it seeks to optimize the amount that is spent in a way that maximizes the output once the total cost is taken into account. In other words, it uses the money that is available to obtain the highest possible benefit for the involved parties. This is done by ensuring that the last bit of money spent is used to get the highest benefit possible, thus allowing for the most efficient use of resources.

Answered by Anna Lee

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