Question

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumedA) no matter what.B) if the marginal benefit of the good is greater than its marginal cost.C) if the total benefit of the good is greater than its total cost.
D) as long as the consumer can afford to pay for it.

Answer 1

Answer:

B. If the marginal benefit of the good is greater than the marginal cost

Explanation:

Marginal benefit is the incremental benefit derived from producing an extra unit of a good. Marginal cost is the incremental cost of producing an additional unit of the good.

When marginal benefit is greater than its marginal cost, the excess of marginal benefit over marginal cost shows that the product is beneficial to society so an extra unit of the good should be produced and consumed.