A gift-giver's efficient number of gifts (to give to a gift-recipient)has fallen from 10 to 8.This could be because
A) the gift-giver's marginal benefit curve for giving gifts shifted down and left.
B) the gift-giver's marginal cost curve of giving gifts shifted up and left.
C) the gift-recipient "fell out" of the gift-giver's utility function.
D) a and b
E) none of the above

Question

Quizplus · Accepted Answer

If the efficient number of gifts decreased from 10 to 8, it suggests that either the gift-giver's marginal benefit of giving gifts decreased, the gift-giver's marginal cost of giving gifts increased, or both. Therefore, options A and B are likely explanations. Option C is not a plausible explanation as it does not really have a direct impact on the gift-giver's decision-making process. Therefore, the correct answer is D, as it includes options A and B.

A Gift-Giver's Efficient Number of Gifts (To Give to a Gift-Recipient)has