Explain the marginal principle.
What will be an ideal response?
The marginal principle says to increase the level of an activity as long as its marginal benefit exceeds its marginal cost, and to choose the level at which the marginal benefit equals the marginal cost.
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If people feel optimistic about the future of the economy ________
A) autonomous consumption might increase B) autonomous investment might increase C) it might shift the IS curve to the right D) all of the above E) none of the above
Suppose technical change permits cable television companies to provide their services at lower rates. The share-the-gains, share-the-pains theory would predict that the regulators would
A) permit the firms to keep the savings and would lower prices only if the firms were pressured to do so. B) force the firms to pass all the savings on to consumers in the form of lower prices. C) force the firms to pass the savings on to consumers in the form of better service. D) force the firms to pass some of the savings on to consumers and to permit the firms to keep some of the savings themselves.