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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

Marginal Cost Marginal Utility Demand Curve Average Cost Price Discrimination 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Limited 1969

Authors and Affiliations

  • Joan Robinson

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