Net benefit can be maximized by equating:
A) total benefit to total cost.
B) marginal benefit to marginal cost.
C) marginal benefit to total cost.
D) total benefit to marginal cost.

Question

Quizplus · Accepted Answer

Net benefit can be maximized by equating marginal benefit to marginal cost. At the point where marginal benefit is less than marginal cost, the overall benefit decreases. Similarly, when marginal cost is less than marginal benefit, the overall cost increases. Therefore, the ideal point of net benefit is reached at the point of marginal benefit being equal to marginal cost.

Net Benefit Can Be Maximized by Equating