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Author Question: Define marginal benefit. Explain how it is measured and why the data in the table does not enable ... (Read 20 times)

plus1

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on: Jun 29, 2018
Define marginal benefit. Explain how it is measured and why the data in the table does not enable you to calculate Brazil's marginal benefit from food.
 
  What will be an ideal response?

Question 2

Why does the model of perfect competition imply that there will be an efficient allocation of resources among firms?
 
  What will be an ideal response?


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atrochim

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The marginal benefit of a good is the benefit received from consuming one more unit of the good. The marginal benefit of a good or service is measured by the most people are willing to pay for one more unit of it. The data in the table do not provide information on how much people are willing to pay for an additional unit of food. The table has no information on the marginal benefit of food.

Answer to Question 2

The model of perfect competition implies an efficient allocation of resources among firms due to the assumption of profit maximization. In order to maximize profit, a firm must minimize the cost of producing its chosen level of output. This means that the firm must choose a production technology that produces the output it wants at the lowest cost. Also, if all firms pay the same input prices, the marginal revenue product of the last unit of an input hired will be the same in all firms. This occurs because maximizing profit means hiring an input up until the inputs marginal revenue product is equal to its price.


plus1

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

Liamb2179

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Reply 3 on: Yesterday
Excellent

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