If marginal cost exceeds marginal benefit, we know that:
A) net benefit is falling.
B) total benefit is falling.
C) total cost exceeds total benefit.
D) net benefit will be maximized by increasing the level of activity.

Question

Quizplus · Accepted Answer

When marginal cost exceeds marginal benefit, it means that the cost of producing one more unit of a good or service is greater than the benefit derived from that additional unit. This situation leads to a decrease in net benefit, as the additional costs are not being offset by equivalent benefits.

If Marginal Cost Exceeds Marginal Benefit, We Know That