Learning Path
Question & Answer
Choose the Best Answer
total cost exceeds total revenue
marginal benefit equals marginal cost
fixed costs are minimized
average variable costs are maximized
Understanding the Answer
Let's break down why this is correct
When the extra benefit from producing one more unit equals the extra cost, you reach the best output. Other options are incorrect because This idea mixes profit with cost; Fixed costs are the same no matter how many units you make.
Key Concepts
Marginal Analysis
medium level question
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Deep Dive: Marginal Analysis
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Definition
Marginal analysis involves comparing the marginal benefit and marginal cost to determine the optimal output level. It helps identify the point where marginal benefit equals marginal cost, ensuring allocative efficiency in production decisions. This concept is essential in economics to make informed choices about resource allocation.
Topic Definition
Marginal analysis involves comparing the marginal benefit and marginal cost to determine the optimal output level. It helps identify the point where marginal benefit equals marginal cost, ensuring allocative efficiency in production decisions. This concept is essential in economics to make informed choices about resource allocation.
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