Asked by Lorena Edanol on Jul 11, 2024
Verified
If marginal costs of production are greater than marginal benefits of production:
A) costs will eventually decrease.
B) too much of the good is being produced.
C) more of the good should be produced.
D) not all costs are being considered.
Marginal Costs
The cost of producing one additional unit of a good or service, reflecting the change in total cost that comes from a one unit increase in output.
Marginal Benefits
The additional benefit received from consuming or producing one more unit of a good or service.
Production
The process of combining various material inputs and immaterial inputs (plans, knowledge) to make something for consumption (the output).
- Understand the relationship between marginal costs and production levels.
- Recognize the conditions under which firms should continue to produce additional units.
Verified Answer
JC
Joseph ChongJul 15, 2024
Final Answer :
B
Explanation :
If marginal costs of production are greater than marginal benefits of production, it means that producing more of the good is not adding enough value to justify the additional cost. In other words, too much of the good is being produced and resources could be better allocated elsewhere. Therefore, it would be best to decrease production to a level where marginal costs are equal to marginal benefits.
Learning Objectives
- Understand the relationship between marginal costs and production levels.
- Recognize the conditions under which firms should continue to produce additional units.