Economists use the word marginal to mean an extra or additional benefit or cost of a decision. an optimal decision occurs when a.

Question

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. an optimal decision occurs when a. marginal benefit equals marginal cost. b. marginal cost is zero. c. marginal benefit is maximized. d. marginal benefit is greater than marginal cost.

Dana Herzog · Accepted Answer

A. Marginal benefits equal marginal costs

Dana Herzog · Answer

Option D Explanation: In simple words, optimal decision refers to the decision that results in at least that level of utility benefit as all other available options do . In other words, it has maximum potential for profit and least expectation of loss. In such decision the utility is taken into consideration and is calculated on the basis of marginal cost and marginal benefit. If it provides for the higher probability that the marginal cost will be equal to marginal benefit than it would be considered as an optimal decision. Hence the correct option is D.

Dana Herzog · Answer

B. marginal benefit equals marginal costExplanation:As we know that the marginal in the economics term means that it is an extra or additional cost that could be incurred in producing an additional outputAnd, the optimal decision means the decision when the marginal benefit is equivalent to the marginal cost In numerical terms, marginal benefit = marginal costhence, the correct option is B.

Dr. Katlynn Swaniawski II

Economists use the word marginal to mean an extra or additional benefit or cost of a decision. an optimal decision occurs when a.

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