If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,
A) more hot dogs should be produced.
B) fewer hot dogs should be produced.
C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced.
D) production should be halted.
E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

Question

Quizplus · Accepted Answer

If the marginal benefit of a hot dog is greater than its marginal cost, then it means that producing one more hot dog will add more value to consumers than it will cost to produce it. In this scenario, it is efficient to produce more hot dogs as long as the marginal benefit remains greater than the marginal cost. Therefore, the best choice is to produce more hot dogs (choice A).

If the Marginal Benefit of a Hot Dog Is Greater