The decision-maker maximizes the activity's net contribution to his ________ by choosing the quantity Q* at which the MPB just _____ the MPC.

Question

Quizplus · Accepted Answer

The decision-maker is assumed to be rational and seeks to maximize his own well-being. The optimal quantity is where the marginal private benefit (MPB) equals the marginal private cost (MPC), as this is where the decision-maker's net benefit is greatest. Therefore, the correct answer is B.

The Decision-Maker Maximizes the Activity's Net Contribution to His ________