Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out? $$\begin{array} { | c | r r | r | }
\hline \text { Units of Activity } & { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$
A)1
B)3
C)4
D)6

Question

Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out? $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)1
B)3
C)4
D)6

Quizplus · Accepted Answer

The Cost-Benefit Principle states that an activity should be carried out up to the point where the marginal benefit equals the marginal cost. In this case, the marginal benefit is $30 for the first unit, $60 for the second unit, and $30 for the third unit. The marginal cost is $10 for the first unit, $20 for the second unit, and $40 for the third unit. Therefore, the activity should be carried out up to the third unit, where the marginal benefit equals the marginal cost.

Refer to the Accompanying Table Below A)1 B)3 C)4 D)6

Refer to the Accompanying Table Below A)1
B)3
C)4
D)6