Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 1 - Limits, Alternatives, and Choices - Questions - Page 20: 9


A marginal benefit curve is downward sloping, while a marginal cost curve is upward sloping. When these curves are overlapped, the optimal allocation of resources is seen when marginal benefit equals marginal cost. Fewer resources should be allocated so the product eventually reaches equilibrium or marginal benefit equaling marginal cost. At this point, the product will be in optimal shape.

Work Step by Step

Marginal benefit equaling marginal cost ensures that a product is at optimal resource allocation. By allocating fewer resources the product will cost less until it reaches equilibrium with marginal benefit.
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