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:

Rising Prices

A situation where the general level of prices for goods and services in an economy increases over a period of time.

Average Total Cost

The total cost of production divided by the quantity of output, encompassing both fixed and variable costs.

Average Variable Cost

The cost per unit of production that varies with the level of output, calculated by dividing the total variable costs by the number of units produced.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production inputs.