Marginal benefit and marginal cost must _______ to avoid a deadweight loss.

Question

Quizplus · Accepted Answer

Marginal benefit refers to the additional benefit obtained by consuming an extra unit of a good or service. Marginal cost, on the other hand, refers to the additional cost incurred by producing an extra unit of a good or service. To avoid a deadweight loss, the marginal benefit of consuming a good or service must be equal to its marginal cost. This ensures that resources are allocated efficiently and that no one is worse off as a result of the transaction. Therefore, the correct answer is A: equal.

Marginal Benefit and Marginal Cost Must _______ to Avoid a Deadweight