In a free market economy, the market, not the government, determines prices. The interaction of producers and consumers determine the price in the market.
A much greater marginal cost than marginal benefit.
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Explanation:</u></h3>
Marginal cost refers to the cost that is added by the production of one additional unit of any product or service.The costs that are included in the various levels of production will be encapsulated in the Marginal cost. For instance consider that a company decides to build a new plant in producing goods and services in addition.
The cost associated with the construction of this new plant is the marginal cost. In many cases the complete elimination of the externality would be involving A much greater marginal cost than marginal benefit.
Answer:
If banks hold excess reserves, then the money multiplier will be smaller.
Explanation:
It is easier to understand using an example:
required reserve rate = 5%
money multiplier = 1 / 5% = 20
if $100 are injected in to the economy and they are deposited in the banking system, the money supply will increase by $100 x 20 = $2,000. But this calculation only works if banks lend 100% of the loanable funds, but if instead banks only lend $90, instead of $95 ($100 x 95%), then the money multiplier will be 1 / 10% = 10. In this case, the money supply will only increase by half
