Marginality and diminishing marginality

Marginality and diminishing marginality

The concept of marginality refers to the least or the smallest possible change that can be achieved by something or an item. It can also be seen as the baseline level of change. This simply means that transactions or change are basically done within margins of value. Whenever an item is in scarcity its value tends to be high, whereas items that can easily be accessed have low value.  Take an example of the amount given to a doctor and that given to a performing artist with a huge record label. The musician gets much than the doctor because their skills and talent are rare. On the other hand, even though the doctor does more than the musician, the pay is low because there are many doctors.  Diminishing marginality also referred to as diminishing marginal utility, is a law of economics expressing that as people expand utilization of an item, there is a decrease in the minimal utility that individual gets from expending each extra unit of that item. This happens while keeping utilization of different items steady. 

The marginal tax rates during the Great Depression

During the Great Depression the state expenditures were rising very fast and the same case applied to the taxes.   According to Kazin et al. (2010) the Great Depression created some kind of pressure on the government to expand its taxation capacity.  The change in the taxation program saw the marginal income tax rate rising up to 79% from as low as 25% between 1929 and 1945. This rise in taxes affected the labor force as most people could not be in a position to keep up with the high taxes. Consequently, the unemployment rate went rose drastically. According to Ferguson & Thomas (2009) the unemployment rate in the USA went as high as 24.9% by March of 1933.

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