Marginal analysis is a technique used by businesses to make decisions based on the additional benefit or cost of producing one more unit of output. By comparing the marginal cost (MC) and marginal revenue (MR), firms can determine the optimal level of production. If MR exceeds MC, increasing production will lead to higher profits. Conversely, if MC exceeds MR, reducing production is advisable. Marginal analysis helps businesses optimize their resources and enhance profitability.