Assuming There Is No Government or Foreign Sector, the Formula

question 112

Multiple Choice

Assuming there is no government or foreign sector, the formula for the multiplier is

• A) 1/(1 - MPC).
• B) 1/MPC.
• C) 1/(1 + MPC).
• D) 1 - MPC.

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Homogeneous Products

Goods that are essentially identical, offered by different sellers within a market.

First-mover Advantage

The competitive advantage gained by the initial ("first-moving") significant occupant of a market segment.

Bertrand Duopoly

A market structure in which two companies compete on price, each setting their price independently with the aim of maximizing profit, assuming the competitor's price is fixed.