The Following Graph Shows the Marginal Cost (MC) and Marginal

question 51

Multiple Choice

The following graph shows the marginal cost (MC) and marginal benefit (MB) of holding real money balances. The market is initially in equilibrium at £100. Refer to the graph to answer the question. Suppose marginal cost increases to MC2 but marginal benefit remains unchanged. The new equilibrium level of real money balances will:

• A) be equal to £75.
• B) be equal to £175.
• C) be equal to £200.
• D) remain the same, at £100.

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Definitions:

Unconscious Rivalry

A competition between individuals that is not recognized or acknowledged by those involved, often driven by subconscious motives.

Resistance

The act of rejecting or resisting something, often through opposing actions or reasoned debate.

Misinterpretation

The act of understanding or interpreting information incorrectly.

Psychoanalysis

An insight therapy that emphasizes the recovery of unconscious conflicts, motives, and defenses through techniques such as free association, dream analysis, and transference.