Questions tagged [marginal]
The marginal tag has no usage guidance.
2
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2answers
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When can I say that a utility function has constant marginal utility?
Does this utility function have increasing/decreasing or constant marginal utility?
$ U(x,y) = x^2 y^2 $
Now, $ f_x = 2xy^2 $, $ f_{xx} = 2y^2 $, $ f_y = 2yx^2 $, $f_{yy} = 2x^2 $
$ f_{xx} $ has no ...
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1answer
48 views
How to calculate marginal utility with two goods?
I'm just getting started as an amateur into microeconomics and I really can't understand this thing about marginal utility when more than one good is involved:
Let's say I have the utility function U ...
2
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0answers
209 views
Derive the cost function and supply function from production function
I didn't study economics, but am quite interested in the topic. I came to the question whether I could derive the supply curve / marginal cost function from the production function and I actually ...
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0answers
25 views
Vertical Marginal Cost curves
When would a marginal cost curve be vertical? I understand this happens when the marginal cost jumps, from say 0 to 100, but in such a case, I think there should be a discontinuity rather than a ...
2
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1answer
148 views
Supply curve when the marginal cost is zero
The supply curve is built as the average marginal cost (MC), when the MC is equal or higher than the average cost (AC)
The marginal cost increases, as a result of the opposite effect of marginal ...
4
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1answer
70 views
Can marginal revenue be increasing?
As per my calculations, the derivative of the MR curve is given by:
MR'(q)=2p'(q)+qp''(q), where p(q) is the inverse demand curve. Therefore,for a downward sloping demand curve, if the second ...
3
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0answers
21 views
How should I calculate bulk selling price for a small business?
Some friends of mine run a small business, in a small garage-like space, with a few employees, making and selling "plumbuses". The typical customer orders about 5 plumbuses at a time. When I heard ...
0
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1answer
33 views
How is marginal benefit measured?
In my economics class, we're learning about the production possibilities frontier, marginal benefits, and marginal costs. The book uses the example of a company that can choose between producing colas,...
0
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1answer
25 views
Difference between the minimum selling price and the actual selling price
I'm actually wondering what the correct name for the difference between the minimum selling price and the actual selling price is?
Let's say I'm having an product A. After all calculations(costs, ...
0
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2answers
81 views
Understanding the law of supply
In high school, I've never really questioned the law of supply, taking it as a given.
As I begin an introductory economics course in university, "relearning" the fundamentals of Economics, I realise ...
0
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1answer
43 views
intuitive interpretation of the marginal return/productivity of capital being less than one
Let's assume you have a production function, f, and you want to know how the output changes with respect to capital, everything else constant (ceteris paribus), so you want to know the marginal ...
1
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1answer
41 views
Constant MC - Monopolstic Competition
I would like to know if it is possible to have constant marginal costs (MC) in a business that is operating on a market, that is defined by monopolistic competition?
The company is a construction ...
0
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2answers
116 views
Does the Marginal Propensity to Import = negative Marginal Propensity to Tax?
the multiplier $= \frac{1}{(1-MPC)}$
and
the multiplier $= \frac{1}{MPW} = \frac{1}{MPS+MPM+MPT}$.
Now since $MPC + MPS = 1$ it follow that $1-MPC = MPS$,
therefore the multiplier = $\frac{1}{(...
7
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1answer
461 views
Homothetic preferences and utility functions
I know that if you have homothetic preferences and a utility function that represents it, then this utility function must present constant Marginal Rate of Substitution (MRS). My question is whether ...
0
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1answer
439 views
Why real wage equals marginal product of labor when return to scale is constant?
I can understand that real wage will equal MPL(marginal product of labor) when MPL is diminishing, because firms will employ more labor until MPL falls to real wage.
While, if MPL is constant, ...
1
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1answer
49 views
relation between the demand function and the marginal utility function
Can one say that the demand curve equals the marginal utility function? I have one course where this is stated.
However, the demand curve dan be derived from combining the utility function with the ...
6
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2answers
2k views
Understanding the shape of a Marginal Cost Curve
My class IB has just discussed allocative efficiency and hence consumer and producer supply. They explained the concepts with a diagram like this:
It all made perfect sense to me until it was ...
0
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1answer
143 views
Econometrics - marginal effect of x on y at average values
I was solving a prep Econometrics exam, with STATA output provided on two different models.
They asked me to " Estimate the marginal effect of ability (x variable) on wage (y variable) for the models ...
1
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2answers
462 views
Proof that for increasing AC MC(Q)>AC(Q) at any Q>0? [closed]
I know the "common sense" proof, but how can we prove it algebraically?
0
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0answers
39 views
Marginal cost slope segments
I have been trying to solve the following question I found during an exam I had, but so far could not find a definitive answer.
According to the theory of costs, is it possible for a marginal cost ...
2
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1answer
167 views
Different terminology for discrete vs. continuous “marginal” concepts?
e.g. Marginal Utility.
If the good you're consuming is discrete, like "slices of pizza eaten", then authors (or at least the author of my textbook) talk about Marginal Utility at each quantity eaten ...
0
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1answer
32 views
Locational Marginal Pricing when different prices and when the same?
I am kinda confused about this YouTube video.
So the LMP with no constraints is the same in both nodes. For me it was the same because I used those offers from node 1 also in node 2 and we chose the ...
1
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1answer
1k views
Link between elasticity and marginal utility
The above is taken from "Economics" 8th Edition by John Sloman, a textbook commonly used at the introductory undergraduate level.
I would like assistance in understanding the bracketed portion - how ...
0
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1answer
724 views
Negative Marginal Returns
In my economics class, we learned that in the short run, there are three stages of marginal returns: increasing, decreasing, and negative.
As a firm adds the first few units of labor, specialization ...
-3
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1answer
56 views
Marginal Profit Derivation [closed]
Find the marginal profit of a firm with a profit function:
$$P(q) = -192q + 88q^2 - 16q^3$$
I got
$$\frac{dP}{dq} = -192 + 176q - 48q^2$$
However, the solution reads
$$ \frac{dP}{dq}= -4(q-2)(q-...
0
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1answer
34 views
Marginal tax rate question [closed]
In relation to an ordinary employee, the Prime Minister of Australia pays?
a) the same marginal tax rate
b) a higher marginal tax ate
c) a lower marginal tax rate
My answer for this ...
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0answers
30 views
Where to start, to know the cost, in hours of work, necessary to produce one more car (or any other good)?
Let's say I want to buy a car. It costs that, so I can know that, for example, I have to work 3 months to pay for it. But does the car really needs three months of human work to be build?
What is the ...
0
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1answer
167 views
marginal utility of consuming vs marginal rate of substitution
good day all
I am taking second year economics, but my textbook is not very clear on this topic
A quoted from
Intermediate Microeconomics and Its Application. Nicholson, Snyder. 11th Edition.
...
6
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1answer
5k views
Is MRS supposed to have a minus sign or not? What's there to say about convexity of preferences?
If we have a utility function $U(x_1, x_2) = x_1(x_2+1)^2$ of some consumer, then
$$MRS_{x_1, x_2} = \frac{\color{red}{-}(x_2+1)}{2x_1}$$
Some books have a $\color{red}{-}$. Others and Wiki don't ...
2
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1answer
60 views
Solve for the bundle component that makes one as 'well off' as earlier
Suppose we have a (presumably time independent?) utility function $U(x_1,x_2)$ for consumer Rita.
1.
What is Rita's MRS of $x_2$ for $x_1$?
$$MRS_{x_1, x_2} = \frac{MU_{x_1}}{MU_{x_2}} = \frac{\...
1
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1answer
146 views
Find Indifference curve/s and Marginal Rate/s of Substitution given only one point
Arka likes fries. She wants to consume as much as possible. She consumes either regular (1 oz) or large sizes (5 oz).
Draw her indifference curve through $(x_R, x_L) = (10,0)$ and her ...
