Following the rational rule, the economic surplus is maximized when
A)total benefits equal total costs.
B)total benefits exceed total costs.
C)marginal benefits equal marginal costs.
D)marginal benefits exceed marginal costs.

Question

Quizplus · Accepted Answer

The rational rule for maximizing economic surplus is to reach the point where marginal benefits equal marginal costs. At this point, any further increase in production would result in a decrease in economic surplus because the additional production cost would be greater than the additional benefit gained. Therefore, choice C is the best answer.

Following the Rational Rule, the Economic Surplus Is Maximized When