What is marginal cost? How is it measured?
What will be an ideal response?
Marginal cost is the opportunity cost of producing one more unit of a good or service. Along a PPF marginal cost is reflected in the absolute value of the slope of the PPF. In particular, the magnitude of the slope of the PPF is the marginal cost of a unit of the good measured along the x-axis. As the magnitude of the slope changes moving along the PPF, the marginal cost changes.
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Drug companies are allowed to be monopolists in the drugs they discover in order to
a. allow drug companies to charge a price that is equal to their marginal cost. b. discourage new firms from entering the drug market. c. encourage research. d. allow the government to earn patent revenue.
Imagine that a country is at point X of this production possibilities frontier and a country is at point Y.
A. The country at point X will probably grow faster than the country at point Y.
B. The country at point Y will probably grow faster than the country at point X.
C. The two countries will probably grow at about the same speed.
D. There is no way of predicting which country will grow faster.