number2 Questions All questions are available in MyEconLab for practice and inst

Question

number2 Questions All questions are available in MyEconLab for practice and instructor I. What is meant by holding all else equal? How is this con- cept used when discussing movements along the demand curve? How is this concept used when discussing move- ments along the supply curve? What is meant by diminishing marginal benefits? Are you likely to experience diminishing marginal benefits for goods that you like a lot? Are there exceptions to the gen- eral rule of diminishing marginal benefits? (Hint: Think about batteries that you would use in a flashlight that re- quires two batteries.) Explain your answer. 0 3. How is the market demand schedule derived from indi- vidual demand schedules? How does the market demand curve differ from an individual demand curve?

Explanation / Answer

The diminishing marginal benefit rule suggest that as more and more units of a particular commodity are consumed the marginal benefit derived from it goes on falling. This rule is applicable in almost every economic good. For example, the first avocado gives us of highest marginal benefit. Or even the first slice of pizza for that matter. With the second third and fourth slices the marginal benefit goes on declining. This happens because the consumer starts feeling satisfied as more and more units he consumes

There are however certain goods in which marginal benefit is not declining. For example the first battery that is used in the flashlight does not give any marginal benefit because the flashlight is still inoperational. For the second battery that is used the marginal benefit is increased because now the flashlight becomes operational. In this case the marginal benefit is increasing.

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