What is marginal cost pricing? Why is marginal cost pricing important?
What will be an ideal response?
Marginal cost pricing is a situation in which price equals the opportunity cost to society of producing one more unit of the good, which is the marginal cost of the good. It is efficient in the sense that it is impossible to increase the output of any good without lowering the value of the total output produced by the society as a whole.
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What is the relationship between a firm's value of marginal product curve for labor and its demand for labor curve? Explain why this relationship exists
What will be an ideal response?
Assume a fixed demand for money curve and the Fed decreases the money supply. In response, people will:
a. sell bonds, thus driving up the interest rate. b. sell bonds, thus driving down the interest rate. c. buy bonds, thus driving up the interest rate. d. buy bonds, thus driving down the interest rate.