14. According to the marginal decision rule in economics, if the marginal benefi

Question

14. According to the marginal decision rule in economics, if the marginal benefit is: A) more than marginal cost, an activity should be reduced. B) less than marginal cost, an activity should be increased. C) equal to marginal cost, total net benefit is maximized. D) more than marginal cost, total net benefit is maximized. 15. If the marginal benefit received from a good is equal to the marginal cost of production, ther A) society's well-being cannot be improved by changing production. B) society's well-being can be improved if production decreases. C) society's well-being can be improved if production increases. D) the market is producing too much of the good. 16. Yo u have rented your first apartment, signing a lease that commits you to pay $500 each month for 12 months. You have an opportunity to take a trip to Europe during the entire month of June and you will spend $2,000 your lease, you must still pay the rent. The cost of taking the trip to Europe is: ng. Your apartment will be vaca A) $2,000, because the $500 for your June rent is a sunk cost. B) $2,500, because this is your total spending during the month of June. C) $1,500, because the June rent is an opportunity cost of traveling that must be deducted from the explicit cost of the trip. D) $2,500, because the June rent is an opportunity cost of traveling and must be added to the explicit cost of the trip. 17. On Saturday night you plan to attend a movie. You buy a ticket for $7 and then lose it. According to marginal analysis, you should: A) go home. B) buy another ticket and attend the movie. C) buy another ticket and attend the movie only if your marginal benefit of seeing the movie is more than $14 D) look for the lost ticket.

Explanation / Answer

First question is answered below

1. Correct option: (c)

Reason: Net benefit = total benefit - total cost

This net benefit is maximized at the point derivative of total benefit equals derivative of total cost

That is, marginal benefit = marginal cost

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