The total net benefit from a quantity-price contract is maximum when:
A) the marginal benefit to the buyer exceeds the seller's marginal cost.
B) the seller's marginal cost exceeds the buyer's marginal benefit.
C) the marginal benefit to the buyer is at its maximum.
D) the marginal cost to the seller is at its minimum.
E) the marginal benefit to the buyer equals the seller's marginal cost.

Question

Quizplus · Accepted Answer

The total net benefit from a quantity-price contract is maximized when the marginal benefit to the buyer equals the seller's marginal cost. At this point, both parties are willing to agree on a price and quantity that maximizes their individual benefits, leading to the maximum total net benefit for both parties.

The Total Net Benefit from a Quantity-Price Contract Is Maximum