Microeconomics

Explain why the marginal cost curve intersects a U-shaped average cost

Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point. What will be an ideal response?   ANSWER At low quantities, the average cost curve declines as the quantity increases. The marginal cost is below the average cost. The marginal cost represents the cost of an additional unit of […]

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Date: September 9th, 2020

Suppose two people start with an initial endowment and trade until the

Suppose two people start with an initial endowment and trade until they obtain a Pareto-efficient allocation with the corresponding price line. What happens when more people who have the same tastes and endowments as the original two traders are included in the Edgeworth box analysis? A) The price line does not change. B) The price […]

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Date: September 9th, 2020