The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the
A) marginal principle.
B) principle of opportunity cost.
C) principle of diminishing returns.
D) spillover principle.

Question

Quizplus · Accepted Answer

The principle described in the question is commonly known as the marginal principle, where individuals and firms make decisions based on the incremental benefit (marginal benefit) of a particular activity compared to the incremental cost (marginal cost) of that activity. They will continue to engage in that activity until the marginal benefit equals the marginal cost.

The Principle That Individuals and Firms Pick the Activity Level