An individual will maximize his or her satisfaction from an activity by engaging in it to the point where:
A) total cost equals total benefit.
B) marginal benefit equals total benefit.
C) marginal cost equals marginal benefit.
D) total cost equals total benefit minus marginal benefit.

Question

Quizplus · Accepted Answer

The principle of marginal analysis states that optimal satisfaction or utility is achieved when the marginal cost of an activity equals its marginal benefit. This means that the individual will continue the activity up to the point where the cost of doing a little bit more (marginal cost) equals the benefit derived from that additional activity (marginal benefit).

An Individual Will Maximize His or Her Satisfaction from an Activity