3a. The MR curve is less than the demand curve for all imperfectly competitive firms because those
firms have to lower their prices in order to increase sales. This effects MR because, since it deals with
additional outputs, that lower price of the extra
Real World Application: Mary has a job where she makes $1000 a week. She decides to take a week of
unpaid vacation time in the Bahamas. The vacation will cost her $500 out of pocket. Mary is paying
$500 out of pocket for the vacation, so this is her e
Real World Application: A company sets the price of its product at $10.00. No one wants the product,
so the price is lowered to $9.00. Demand for the product increases at the new lower price point and the
company begins to make money and a profit. The
1a. Scarcity is defined with the realm of economics that people have unlimited wants but limited
resources. Due to scarcity, people must make choices on how they will use the resources available to
them. Every person has their best self-interest in mind,
Derived Demand: The demand for resources is determined by the products they help produce.
Real World Application/Example: An increase in the demand for cars increases the demand for metal,
car technicians, rubber, carpet, etc.
Marginal Revenue Pro