Question

one would expect that if ________one would increase the level of the activity and if ________one would reduce the level of the activity. Marginal Benefit (mb) versus (mc)Marginal Cost.

答案选项组

mc>mb;mb>mc

mb>mc;mc

mcmc

mb>mc;mc>mb

mbmc

Answer 1

One would expect that if MB>MC, one would increase the level of activity and if MC>MB, one would reduce the activity.

Equilibrium or profit maximising price and output is achieved at a point where marginal benefit equals marginal cost. When MB greater than MC, firms will raise its output till both gets equated. Increasing the output when MB>MC will raise the producer's profit. When MC> MB, the producer will reduce its production to minimise it's cost and maximize the profit.