When the Marginal Benefit of an Output Exceeds the Marginal

question 105

Multiple Choice

When the marginal benefit of an output exceeds the marginal cost,

• A)production of that output should be increased, in order to achieve efficiency.
• B)production of that output should be decreased, in order to achieve efficiency.
• C)increasing the production of that output would increase the deadweight loss.
• D)reducing the production of that output would reduce efficiency losses.

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Definitions:

Marginal Utility

The supplementary satisfaction or advantage a consumer experiences by using one more unit of a good or service.

Diminishing

Refers to the principle where additional units of input result in progressively smaller increases in output, often applied in the context of diminishing marginal returns in production.

Dozen Oysters

A quantity of oysters amounting to 12 units, often used in the context of serving or purchasing seafood.

Total Utility

The overall satisfaction or benefit a consumer receives from consuming a certain quantity of goods or services.