When actions are finely divisible marginal benefit is ______ marginal cost at an interior best choice.
A) Greater than
B) Less than
C) Equal to
D) Greater than or equal to

Question

Quizplus · Accepted Answer

When actions are finely divisible, the difference between marginal benefit and marginal cost becomes small, ultimately becoming zero at the optimal choice. Hence, at the interior best choice, marginal benefit is equal to marginal cost.

When Actions Are Finely Divisible Marginal Benefit Is ______ Marginal