Economists use the word marginal to mean an extra or additional benefit or cost of a decision. an optimal decision occurs when a.

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. an optimal decision occurs when a. marginal benefit equals marginal cost. b. marginal cost is zero. c. marginal benefit is maximized. d. marginal benefit is greater than marginal cost.

Answers

A. Marginal benefits equal marginal costs

Option D

Explanation: In simple words, optimal decision refers to the decision that results in at least that level of utility benefit as all other available options do . In other words, it has maximum potential for profit and least expectation of loss.

In such decision the utility is taken into consideration and is calculated on the basis of marginal cost and marginal benefit. If it provides for the higher probability that the marginal cost will be equal to marginal benefit than it would be considered as an optimal decision.

Hence the correct option is D.

B. marginal benefit equals marginal cost

Explanation:

As we know that the marginal in the economics term means that it is an extra or additional cost that could be incurred in producing an additional output

And, the optimal decision means the decision when the marginal benefit is equivalent to the marginal cost

In numerical terms,

marginal benefit = marginal cost

hence, the correct option is B.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts