When choosing how much of an activity to undertake,such as how much corn to produce,a private decision-maker assesses the marginal private benefit (MPB)and the marginal private cost (MPC)of each additional unit,and chooses the quantity of activity at which the ____________.

Question

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The private decision-maker chooses the quantity of activity at which the MPC and the MPS are equal. This is because at this point, the marginal private benefit equals the marginal private cost, maximizing the net benefit or profit for the decision-maker. Choosing a quantity where the MPC just exceeds the MPS or where the private benefits outweigh the private costs would result in lower net benefits or even losses.

When Choosing How Much of an Activity to Undertake,such as How