At the optimal or efficient level of an activity,the activity's marginal benefit must
A) be zero.
B) be greater than zero.
C) equal the marginal cost of the activity.
D) exceed the marginal cost of the activity.

Question

Quizplus · Accepted Answer

At the optimal level of an activity, the marginal benefit must be equal to the marginal cost of the activity. This is because any further increase in the activity would result in a marginal cost that exceeds the marginal benefit, leading to a decrease in overall welfare. Therefore, the optimal level involves the point at which marginal benefit equals marginal cost.

At the Optimal or Efficient Level of an Activity,the Activity's