   Chapter 19, Problem 2WNG

Chapter
Section
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 benefits of giving gifts decline.

To determine

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

Explanation

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

In Figure -1, the horizontal axis measures number of gifts and the vertical axis measures marginal cost and marginal benefit.

In Figure -1, the initial equilibrium occurs where the marginal cost equals to the marginal cost...

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