Compare and Contrast the MPC and the MPS

question 30

Essay

Compare and contrast the MPC and the MPS. Also explain what these two figures must always add up to.

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Definitions:

Inelastic Demand

A market situation where the demand for a product does not significantly change with a change in price.

Elastic Demand

A market condition where the demand for a product or service significantly changes in response to price changes.

Opportunity Cost

The cost of a missed opportunity; the value of the best alternative forgone.

Direct Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based directly on the willingness to pay.