-Which of the following statements is true?
A) Total benefit and net benefit are both at their maximum at four units of activity.
B) Marginal benefit and net benefit are both at their maximum at one unit of activity.
C) Net benefit is less than zero at three and four units of activity because in both instances marginal benefit is less than marginal cost.
D) Net benefit is increasing when going from one to two units of activity, and decreasing when going from three to four units of activity.

Question

-Which of the following statements is true?
A) Total benefit and net benefit are both at their maximum at four units of activity. 
B) Marginal benefit and net benefit are both at their maximum at one unit of activity. 
C) Net benefit is less than zero at three and four units of activity because in both instances marginal benefit is less than marginal cost. 
D) Net benefit is increasing when going from one to two units of activity, and decreasing when going from three to four units of activity.

Quizplus · Accepted Answer

Net benefit increases when the marginal benefit of an additional unit of activity exceeds the marginal cost of that unit. Thus, if net benefit is increasing from one to two units, it implies that the marginal benefit of the second unit is higher than its marginal cost. Conversely, if net benefit is decreasing from three to four units, it suggests that the marginal cost of the fourth unit exceeds its marginal benefit, leading to a decrease in net benefit.

-Which of the Following Statements Is True