In one or two sentences, explain why people will do less of an activity when the marginal costs are greater than the

marginal benefits.

Question

Cheese

Business

5 June, 22:03

In one or two sentences, explain why people will do less of an activity when the marginal costs are greater than the

marginal benefits.

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Answers (1)

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Aspen · Answer 1

To reduce losses

Explanation:

Marginal cost refers to the extra expense associated with the production or sale of one more unit of a product or service. Marginal revenue is the gain derived from selling an extra unit. Marginal cost is compared to marginal revenue to determine the viability of extra production.

When marginal cost is higher than marginal revenue, it means the business is incurring a loss by selling one more product. The business is better off not selling the additional unit. People will do less of that activity because it is not worth doing it. It is a loss-making venture.

In one or two sentences, explain why people will do less of an activity when the marginal costs are greater than themarginal benefits.

In one or two sentences, explain why people will do less of an activity when the marginal costs are greater than the

marginal benefits.