When faced with a quantity decision, the economic surplus is always maximized by following the
A)Rational Rule.
B)framing effect.
C)opportunity cost principle.
D)interdependence principle.

Question

Quizplus · Accepted Answer

The Rational Rule states that economic agents (consumers, producers, etc.) should continue to engage in an activity as long as the additional benefit from doing so exceeds the additional cost. This means that in a quantity decision, economic surplus (the difference between the total benefit and total cost) can be maximized by choosing the quantity that equates marginal benefit and marginal cost. This is known as the optimal quantity, and it is determined by comparing the additional benefit of producing or consuming an additional unit of a good or service with the additional cost of doing so. Therefore, the Rational Rule is the best option for maximizing economic surplus in a quantity decision.

When Faced with a Quantity Decision, the Economic Surplus Is