If the marginal cost of producing one more unit is higher than the marginal benefit, it is rational to proceed with production of that unit.

When deciding whether to produce one more unit of a product, we look at two important ideas: marginal cost and marginal benefit. Marginal cost is how much it costs to make that extra unit, while marginal benefit is the value or satisfaction we get from it. If the marginal cost is higher than the marginal benefit, it means that producing that extra unit will cost us more than what we will gain from it, so it is not smart to go ahead with production. For example, if it costs $10 to produce one more toy, but selling it only brings in $7, then we lose money by making that extra toy. Therefore, in this case, it is rational to stop production because we would be better off not making that unit.