In order to maximize net benefits,firms should produce where:
A) total benefits equal total costs.
B) profits are zero.
C) marginal cost is minimized.
D) marginal benefits equal marginal costs.

Question

Quizplus · Accepted Answer

Firms should produce where marginal benefits equal marginal costs because this is the point where they are allocating resources most efficiently and maximizing their net benefits. At any point before this, they could increase production and get more benefits than costs, and at any point after this, they would be experiencing more costs than benefits. Therefore, producing at the point where marginal benefits equal marginal costs is the best choice for maximizing net benefits.

In Order to Maximize Net Benefits,firms Should Produce Where