A person should consume more of something when its marginal

A person should consume more of something when its marginal

A. cost exceeds its marginal benefit

B. cost equals its marginal benefit

C. benefit is still positive

D. benefit exceeds its marginal cost

Answer: D. benefit exceeds its marginal cost

The terms marginal benefit and marginal cost are used to describe the additional satisfaction that a consumer gains from repeating the same act of purchasing another unit of the goods or service and the cost incurred in repeating the act respectively. In accordance with the principle of utility maximization, a rational consumer should go on consuming a particular good or service as long him/ her total beneficiary worth out of the next unit is more than the total cost incurred. Therefore, at the junction where marginal benefit is equal to marginal cost, the consumer is maximally satisfied or in other words is on his/her utility frontier. In the case where the marginal benefit is less than the marginal cost, consuming one more unit will actually decrease the consumer’s total utility or level of satisfaction; hence, consumptions should be cut down.