# Questions tagged [marginal]

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### How to calculate and interpret a marginal treatment effect (local instrumental variable)? (Intuition through simple example.)

I am working on the intuition behind local instrumental variables (LIV), also known as the marginal treatment effect (MTE). I have worked some time on this and would benefit from solving a simple. I ...
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### What's the formula for calculating the Marginal Rate of Substition using Total Utility function, total utility, quantities of both X, and Y?

The question is as follows: If the total utility function of two goods, X, and Y, is: TU = f(X,Y) = sqrt(XY), total utility is equal to 25, and X = 5, then what must the Y be? What's the Marginal Rate ...
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### Monopoly: Demand Curve and Marginal Revenue Curve Intercepts

I'm doing an introductory economics course, having never done economics before. In our topics, we covered monopoly and the principle that the marginal revenue slope is twice that of the demand slope. ...
260 views

### Is it true that if marginal cost is constant, then average variable cost is also constant and equals marginal cost?

I'm inclined to think yes because marginal cost only depends on variable cost (fixed costs don't matter), but I'm not 100% certain. Basically, my thought process is that marginal cost of producing one ...
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### Non Linear regression to obtain diminishing marginal effect / elasticity

I am working with some real estate data on housing units. For a given market, I have data on occupied units, rents, and control variables such as population, demographics, income levels etc. I'd like ...
43 views

### Question about an interpretation of the MRS

Given the marginal rate of substitution of $x$ for $y$ : $\frac{u'(x)}{u'(y)}$ I know one can interpret this as the amount of $y$ one is willing to give up for an additional unit of $x$, or the ...
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### Returns to Scale Microeconomics

Are there any production function $f(x_1,\ldots,x_n)$ that is having decreasing returns to scale, given that the marginal product in every input $i$ in the function $f$ is constant?
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### Marginal rate of substitution(yx) question

For utility function U= ln(x)+Y How do I determine if MRS(yx) is diminishing or not for this question? I got Mu(x)=1/x and Mu(y)= 1 MRS(yx)=Mu(y)/Mu(x)= 1/1/x = x Does this mean that MRS(yx) is ...
609 views

### 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 ...
4k 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 ...
2k 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 ...
116 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 ...
60 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 ...
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### 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,...
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### 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, ...
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### 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 ...
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### 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 ...
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### 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 ...
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### 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 ...
2k 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 ...