Refer to the figure below,which shows marginal benefits (MB)and marginal cost (MC)of activity A: If the decision maker is choosing 300 units of activity A,
A)this level maximizes net benefits.
B)if the activity is increased by one unit,net benefits will increase by $20.
C)if the activity is decreased by one unit,net benefits will decrease by $20.
D)both b and c
E)all of the above

Question

Refer to the figure below,which shows marginal benefits (MB)and marginal cost (MC)of activity A:  If the decision maker is choosing 300 units of activity A,
A)this level maximizes net benefits. 
B)if the activity is increased by one unit,net benefits will increase by $20. 
C)if the activity is decreased by one unit,net benefits will decrease by $20. 
D)both b and c 
E)all of the above

Quizplus · Accepted Answer

At 300 units of activity A, the marginal benefit (MB) equals the marginal cost (MC), which maximizes net benefits. Any increase or decrease in activity would result in a decrease in net benefits, so options B and C are incorrect. Therefore, the only correct answer is A.

Refer to the Figure Below,which Shows Marginal Benefits (MB)and Marginal