Refer to the figure below,which shows marginal benefits MB)and marginal cost MC)of activity A: If the decision maker is choosing 300 units of activity A,
A)this level maximizes net benefits.
B)if the activity is increased by one unit,net benefits will increase by $20.
C)if the activity is decreased by one unit,net benefits will decrease by $20.
D)both b and c
E)all of the above

Question

Refer to the figure below,which shows marginal benefits MB)and marginal cost MC)of activity A:  If the decision maker is choosing 300 units of activity A,
A)this level maximizes net benefits. 
B)if the activity is increased by one unit,net benefits will increase by $20. 
C)if the activity is decreased by one unit,net benefits will decrease by $20. 
D)both b and c 
E)all of the above

Quizplus · Accepted Answer

At 300 units of activity A, the marginal benefit (MB) is equal to the marginal cost (MC), which means that net benefits are maximized. Moving in either direction from 300 units would result in a decrease in net benefits, so options B and C are incorrect. Therefore, the correct answer is A.

Refer to the Figure Below,which Shows Marginal Benefits MB)and Marginal