A person will continue to pursue an activity up to the point where ?
Correct answer: C. marginal benefit equals marginal private cost
- A. Marginal benefit equals marginal damage cost
- B. marginal benefits equals marginal social cost
- C. marginal benefit equals marginal private cost
- D. marginal social cost equals marginal external cost
Explanation
A person making a private decision continues an activity while its marginal benefit exceeds its marginal private cost, stopping where the two are equal. Marginal social cost includes effects on others and is relevant to the socially efficient level, not necessarily the individual's choice.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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