To maximize the net benefit from an action, an individual must engage in it to the point where:
A) total benefit equals total cost.
B) marginal benefit equals marginal cost.
C) total benefit exceeds net benefit by the greatest amount.
D) marginal benefit exceeds marginal cost by the greatest amount.

Question

Quizplus · Accepted Answer

The principle of equating marginal benefit to marginal cost is fundamental in economics for determining the optimal level of an activity. At this point, the net benefit (the difference between total benefits and total costs) is maximized, ensuring that the last unit of the activity provides just enough benefit to cover its cost, without leaving any potential gains unexploited.

To Maximize the Net Benefit from an Action, an Individual