-In going from three to four units of activity, net benefit would:
A) increase because total benefit is increasing.
B) decrease because marginal benefit is decreasing.
C) increase because total benefit is greater than zero.
D) decrease because marginal cost is greater than marginal benefit.

Question

-In going from three to four units of activity, net benefit would:
A) increase because total benefit is increasing. 
B) decrease because marginal benefit is decreasing. 
C) increase because total benefit is greater than zero. 
D) decrease because marginal cost is greater than marginal benefit.

Quizplus · Accepted Answer

The correct answer is D because when the marginal cost of an additional unit of activity is greater than the marginal benefit derived from it, the net benefit of increasing the activity decreases.

-In Going from Three to Four Units of Activity, Net