What Typically Happens to Benefits as the Amount of an Activity

question 68

Multiple Choice

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

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

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Definitions:

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical, allowing for slight differentiation and some pricing power.

Fixed Costs

Costs that do not change with the level of output or activity, such as rent or salaries.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting the firm's ability to adjust production in response to market changes.

Monopolistically Competitive

A market framework where numerous companies offer products that are alike but not exactly the same, providing room for a bit of market influence and variation in products.