When faced with a quantity decision, the economic surplus stops increasing when
A)total benefits equal to total costs.
B)total benefits exceed total costs.
C)marginal benefits equal marginal costs.
D)marginal benefits exceed marginal costs.

Question

Quizplus · Accepted Answer

Economic surplus is maximized when marginal benefits equal marginal costs, meaning that any further increase in quantity will lead to the marginal cost being greater than the marginal benefit. At this point, the economic surplus stops increasing and may even decrease if quantity continues to increase.

When Faced with a Quantity Decision, the Economic Surplus Stops