Engaging in an activity until marginal benefits equal marginal costs is known as
A)the diminishing marginal returns
B)the diminishing marginal utility
C)the marginal decision rule
D)the marginal utility rule

Question

Quizplus · Accepted Answer

The Marginal decision rule states that if the marginal benefit of an activity is greater than or equal to its marginal cost, you should engage in it. If the marginal cost is greater than the marginal benefit, you should not. This allows individuals and firms to make rational decisions about how to allocate their resources effectively. Option A, diminishing marginal returns, refers to the decrease in output or production as more and more units are added to a fixed input. Option B, diminishing marginal utility, refers to the decrease in satisfaction or usefulness as more and more units of a good are consumed. Option D, the marginal utility rule, is not a commonly used economic concept.

Engaging in an Activity Until Marginal Benefits Equal Marginal Costs