According to the Marginal Decision Rule, If Marginal Benefit

question 17

Multiple Choice

According to the marginal decision rule, if marginal benefit:

• A) exceeds marginal cost, an activity should be reduced.
• B) is less than marginal cost, an activity should be increased.
• C) is equal to marginal cost, net benefit is maximized.
• D) exceeds marginal cost, net benefit is maximized.

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Definitions:

Present Value

The present value of a future amount of money or series of cash flows, considering a particular return rate.

Interest Rate

The percentage of the principal charged by a lender for the use of its money or the rate at which interest is paid by a borrower for the use of money.

Consumes

The action of using up a good or service, typically resulting in a decrease in available quantity.

Consumption

The use of goods and services by households. It is an important component of GDP and a direct indicator of consumer spending behavior.