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Extensive Margin

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PPGPortal > Home > Concept Dictionary > D, E > Extensive Margin
 

Extensive Margin

An adjustment on the extensive margin occurs when a price change causes an individual to decide to either enter the market for a good or exit a market altogether.

(Dwayne Benjamin, Toronto PPG 1002H)

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If a price decrease causes somebody who was previously not a consumer of caviar to begin purchasing it, this decision has been made on the extensive margin. Similarly, if a rise in the price of caviar drives somebody out of the caviar market altogether, this decision has been made on the extensive margin.

     

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