If the Marginal Benefit from Another Computer Exceeds the Marginal

question 158

Multiple Choice

If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources allocatively efficiently,

• A) fewer resources should be used to produce computers.
• B) if the marginal benefit exceeds the marginal cost by as much as possible, the efficient amount of resources are being used to produce computers.
• C) more resources should be used to produce computers.
• D) None of the above is correct because marginal benefit and marginal cost have nothing to do with using resources allocatively efficiently.

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Definitions:

Initial Investment

The initial amount of money invested in a project, property, or business to start operations.

Required Rate

The minimum return an investor expects to achieve when investing in a project or security.

Annuity

A financial product that provides a series of payments at fixed intervals, often used for retirement savings or income generation.

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them back to the present day, used in capital budgeting to assess the profitability of an investment.