Question:
A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost. a. True b. False
Posted By Admin @ September 03, 2022
A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost. a. True b. False
It is true that a rational decision maker takes an action only when the marginal benefit exceeds the marginal cost.
In economics, a equilibrium is achieved in any economic model at the point where the marginal cost is equal to marginal benefit.
Hence, for a rational decision-maker, a profit or net-surplus will be maximized when the marginal benefit is at least equal to the marginal cost because the higher the marginal benefit from the cost more will be the profit.
In conclusion, it is true that a rational decision maker takes an action only when the marginal benefit exceeds the marginal cost.
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