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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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BuyFindarrow_forward

Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

Diagrammatically represent what happens to the efficient number of gifts that a gift giver wants to give to a gift recipient as the marginal cost of giving gifts declines.

To determine

Explain diagrammatically the impact of efficient number of gifts that a gift giver gives to a gift recipients when the marginal cost of giving gift declines.

Explanation

Figure -1 the impact of decrease in marginal cost as follows:

In Figure -1, the initial equilibrium occurs where the marginal cost equals to the marginal benefit. At this equilibrium, the efficient number of the output of a gift for gift giver is at the point E1, which is 5...

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