Questions tagged [marginal]

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1answer
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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 ...
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1answer
2k 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, ...
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1answer
158 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
4k 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
394 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 ...
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2answers
1k 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?
2
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1answer
527 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
46 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
3k 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
1k 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 ...
-2
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1answer
58 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
41 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 was a), as it was ...
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0answers
34 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 ...
1
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1answer
338 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. ...
5
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1answer
9k 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
72 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
200 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 indifference ...

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