1a) Is a marginal value curve the same as a marginal cost curve? 1b) How does...

1a) Is a marginal value curve the same as a marginal cost curve?

1b) How does arbitrage- buying low in one market and selling high in another increase market effciency?

Please answer with simple words and no mathematical jargon that cannot be understood.

Solutions

Expert Solution

1) a) Marginal cost curve represents the additional cost incurred by the firm in one additonal output. It can be determined as the incremental cost.

In the other hand A marginal Value curve represent the picture when we increase our consumption of extra one good considering els constant..

so, Now Marginal value curve can be obtained from the difference between Marginal Benefit and Marginal Cost. In simple terms it is the amount of benefit you get per each extra unit of measure minus the amount it's cost you..

Hence, Marginal Value Curve can not be se as Marginal Cost Curve..

1) b) Arbitrage is consider as buying low in one market and selling high in another market to increase the profit. It helps in increase market efficiency as per the presence of arbitrageous forces and price convergence principal which indicate the degree for goods and services have converged; which is an important factor for the efficiency of the market..

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Rahul Sunny answered 3 weeks ago

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