A student chooses to study because the marginal benefit is greater than the ______________ cost?
Correct answer: D. marginal
- A. average
- B. expected
- C. total
- D. marginal
Explanation
A student should study when the additional benefit from studying exceeds the additional, or marginal, cost such as forgone leisure or earnings. Average and total costs do not provide the relevant decision rule for one more unit of activity.
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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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