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Author Question: If the institutions in an economy decide to limit the legal back up that protected the interest of ... (Read 33 times)

evelyn o bentley

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on: Jun 30, 2018
If the institutions in an economy decide to limit the legal back up that protected the interest of entrepreneurs, the returns-to-entrepreneurship curve in the economy will:
 
  A) shift leftward. B) shift rightward.
  C) become vertical. D) become horizontal.

Question 2

What is the Principal of Optimization at the Margin? Explain with an example.
 
  What will be an ideal response?
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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ansleighelindsey

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A

Answer to Question 2

The Principal of Optimization at the Margin states that an optimal alternative has the property wherein moving to it makes the decision maker better off, and moving away from it makes the decision maker worse off. For example, if an individual has to choose between alternative apartments, she will choose moving toward the apartment that lowers her total cost, and moving away from the apartment that increases her total cost. Such an apartment will be an optimal choice according to the Principal of Optimization at the Margin.


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