The Marginal Principle States That "We Should Increase the Level

question 24

Multiple Choice

The marginal principle states that "we should increase the level of an activity as long as

• A) its marginal benefit exceeds it marginal cost."
• B) its marginal cost exceeds its marginal benefit."
• C) its total benefit exceeds its total cost."
• D) its total cost exceeds its total benefit."

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Definitions:

Birthrates

The number of live births per thousand of the population in a given period, used as an indicator of population growth.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are traded in a free market.

Interest

The charge for borrowing money or the return on investment in savings accounts or bonds, typically expressed as a percentage.