According to the marginal decision rule, if marginal benefit:
A) exceeds marginal cost, an activity should be increased.
B) is less than marginal cost, an activity should be increased.
C) is equal to marginal cost, an activity should be increased.
D) exceeds marginal cost, net benefit is maximized.

Question

Quizplus · Accepted Answer

According to the marginal decision rule, an activity should be increased only if the marginal benefit exceeds the marginal cost. This is because the net benefit is maximized when the marginal benefit is greater than or equal to the marginal cost. Therefore, the correct choice is A, as it states that an activity should be increased when the marginal benefit exceeds the marginal cost.

According to the Marginal Decision Rule, If Marginal Benefit