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An Economics Classroom Has a Very Happy Student

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Essay

An economics classroom has a very happy student. Every compliment from the professor makes this student exquisitely happy. There is also a morose student who rejects every compliment. What economic principle could the professor use to allocate compliments between these two students?


Definitions:

Marginal Cost

The boost in expenditure linked to creating an additional unit of a good or service.

Average Total Cost

Refers to the sum of all production costs divided by the total output produced, indicating the cost per unit of producing a good or service.

Cakes

Baked desserts that are typically sweet and made from ingredients such as flour, sugar, and eggs.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good changes as more of that good is produced.

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