If the MC of an activity exceeds the MB, the activity should be increased.

Question

Quizplus · Accepted Answer

If the marginal cost (MC) of an activity exceeds the marginal benefit (MB), it means that the cost of producing an additional unit of output is greater than the benefit gained from producing that additional unit. In this case, continuing to increase the activity would result in diminishing returns and lower overall profitability. Therefore, the activity should be reduced or stopped altogether.

If the MC of an Activity Exceeds the MB, the Activity