Question

Define the marginal cost and marginal benefit and describe the role they play in making a

rational economic decision.

Answer 1

See below

Step-by-step explanation:

Marginal cost is the expense associated with the production of an extra unit. It is the cost incurred by a business should it produce one more unit.

Marginal benefit is the gain resulting from the sale of one more output. It is the revenue earned from the sale of an extra unit of output.

Marginal benefit is compared to marginal cost to determine if producing and selling an extra unit is profitable or not. If the marginal benefit is greater than marginal cost, selling an extra unit is profitable. In making economic decisions, production should continue as long as the marginal benefit is greater or equal to marginal cost. It must stop when marginal cost is more than marginal benefit.