Abstract

THE principle underlying the analysis of the decisions of a buyer as to how much of a commodity to buy is that he will equate marginal utility to marginal cost. As we have seen, this statement is no more than a tautology. If the supply of the commodity to him is perfectly elastic he will equate marginal utility to price. This will occur, first, if he is one of a large number of buyers, so that a change in his purchases has a negligible effect upon the total output of the commodity, and consequently a negligible effect upon its price; or, second, if the commodity is sold under conditions of constant supply price, so that even if a change in his purchases produces a significant change in output it causes no change in price.

Keywords

Crest Monopoly 

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 1969

Authors and Affiliations

  • Joan Robinson

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