In economic analysis,at the optimal quantity of an activity:
A)marginal benefit exceeds marginal cost by the greatest amount.
B)total benefit equals total cost.
C)marginal benefit equals total benefit.
D)total benefit exceeds total cost by the greatest amount and marginal benefit equals marginal cost.

Question

Quizplus · Accepted Answer

At the optimal quantity, total benefit exceeds total cost by the greatest amount, indicating that the activity is generating a net positive benefit. Additionally, at this quantity, marginal benefit equals marginal cost, meaning that the benefit gained from producing one more unit of the activity is exactly equal to the cost of producing that additional unit. This represents the point of efficiency where resources are allocated in the most effective way possible.

In Economic Analysis,at the Optimal Quantity of an Activity