Which of the following is true regarding marginal benefit? I.The marginal benefit curve shows the benefit firms receive by producing another unit of a good.
II.Marginal benefit increases as more and more of a good is consumed.
III.Marginal benefit is the maximum amount a person is willing to pay to obtain one more unit of a good.
A)I only
B)I and II
C)I and III
D)III only
E)I,II,and III

Question

Quizplus · Accepted Answer

Marginal benefit typically refers to the maximum amount a consumer (not a firm) is willing to pay for an additional unit of a good or service, which is accurately described in statement III. Statement I is incorrect because it confuses marginal benefit with a concept more akin to marginal cost or marginal revenue for firms. Statement II is incorrect because marginal benefit usually decreases as more of a good is consumed, due to the law of diminishing marginal utility.

Which of the Following Is True Regarding Marginal Benefit? I