Mar 13, 2018 · E.g. think about the effectiveness of extra workers in a small café. If more workers are employed, production could increase but more and more slowly. This law only applies in the short run because, in the long run, all factors are variable. Law of diminishing marginal returns explained. Assume the wage rate is £10, then an extra worker costs ... After trade, the world market price (the price an international consumer must pay to purchase a good) of both goods will fall between the opportunity costs of both countries. For example, the world price of a bicycle will be between 5/3 shirt and 2 shirts, thereby decreasing the price the Italians pay for a shirt while allowing the Italians to ...
Evaluation: advertising can have very high costs and opportunity costs. Also the benefits may take many years to materialise and so its short term effects are limited. The direct provision of a good also helps to decrease the private costs associated with consumption, such as the NHS healthcare system and state school education. 5. If the market price of a good is more than the opportunity cost of producing it, a. the market price of the product will increase in the long run. b. producers will increase supply in the long run. c. resources will flow away from production of the good, causing supply to decline with the passage of time.
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