According to the marginal principle, a rational individual should not undertake an economic activity if the:
A) total benefit equals total cost.
B) marginal benefit is less than marginal cost.
C) marginal benefit equals marginal cost.
D) marginal benefit exceeds marginal cost.

Question

Quizplus · Accepted Answer

The marginal principle states that an individual should undertake an economic activity as long as the marginal benefit is greater than or equal to the marginal cost. Therefore, if the marginal benefit is less than the marginal cost, the rational individual should not undertake the activity. Choices A and C are not necessarily true since the total benefit or cost may not reflect the marginal analysis. Choice D may lead to overproduction, which is not efficient.

According to the Marginal Principle, a Rational Individual Should Not