What Typically Happens to Benefits as the Amount of an Activity

question 22

Multiple Choice

What typically happens to benefits as the amount of an activity is increased?

• A) Marginal benefit increases.
• B) Marginal benefit decreases.
• C) Marginal benefit remains constant.
• D) The marginal benefit changes only if the marginal cost changes.
• E) Total benefit remains constant.

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Definitions:

Derived Demand

Demand for a good or service that arises from the demand for another good or service; for example, the demand for steel is derived from the demand for cars.

Resource Demand

Refers to the total amount of goods and services that businesses require to produce their own goods and services.

MRP

An acronym for Material Requirements Planning, a system used for production planning and inventory control, or alternatively for Marginal Revenue Product, the extra revenue generated from employing one more unit of a resource.

Wage Rate

The fixed amount of compensation paid to employees for their labor, typically expressed as a rate per hour.