Marginal benefits and marginal costs:
A) capture the way total benefits and total costs change as the amount of an activity changes just a little bit.
B) are constant, regardless of the amount of an activity that is pursued.
C) tend to increase as a decision maker does more of an activity.
D) tend to decrease as a decision maker does less of an activity.

Question

Quizplus · Accepted Answer

Marginal benefits and marginal costs refer to the additional benefits and costs that arise from a small change in the level of an activity. In other words, they capture how total benefits and total costs change as the amount of an activity changes just a little bit. This makes option A the correct answer. Option B is incorrect because marginal benefits and costs are not constant, but rather vary with the level of the activity in question. Options C and D are partially correct but incomplete, as marginal benefits and costs may increase or decrease depending on the specific activity being considered.

Marginal Benefits and Marginal Costs