Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a), the maximum net benefit is shown:
A) where the level of activity is at D.
B) by the intersection of MB and MC.
C) by the area of triangle ABC.
D) in all of the above cases.

Question

Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit
 
-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (a), the maximum net benefit is shown:
A) where the level of activity is at D. 
B) by the intersection of MB and MC. 
C) by the area of triangle ABC. 
D) in all of the above cases.

Quizplus · Accepted Answer

The maximum net benefit in economic analysis is identified where the Marginal Benefit (MB) curve intersects the Marginal Cost (MC) curve, which typically corresponds to a specific level of activity (in this case, represented as D). Additionally, the area of triangle ABC visually represents the net benefit, capturing the difference between total benefits and total costs up to the optimal level of activity. Therefore, all the given options correctly describe how the maximum net benefit can be shown.

Use the Following for Questions 55-59