These are fill in the blank question that are confusingme.. probably due to a Me

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These are fill in the blank question that are confusingme.. probably due to a MeNtaL studying overload, but either way, Ineed some help ;) If anyone has a clue, please let me know.. THANKSYA'LL <3

** If marginal benefit is greater thanmarginal cost the decision maker will profit?

** As they continue to do more,marginal benefit usually decreases? **Marginal cost, the value of what is beinggiven up, will thereforerise? ** Under these conditions, the difference between marginalbenefit and marginal cost will ___?___. These are fill in the blank question that are confusingme.. probably due to a MeNtaL studying overload, but either way, Ineed some help ;) If anyone has a clue, please let me know.. THANKSYA'LL <3

** If marginal benefit is greater thanmarginal cost the decision maker will profit?

** As they continue to do more,marginal benefit usually decreases? **Marginal cost, the value of what is beinggiven up, will thereforerise? ** Under these conditions, the difference between marginalbenefit and marginal cost will ___?___. ** Under these conditions, the difference between marginalbenefit and marginal cost will ___?___.

Explanation / Answer

Marginal cost: It is the very cost incurred by oneadditional unit of production. Marginal means incremental,additional or extra.

(a)    Economic choices are largely based uponexpected marginal costs and expected marginal benefit underconsideration. Rational decision makers will make choices until theexpected marginal benefit exceeds expected marginal cost. Hence, ifthe marginal benefit is greater than marginal cost, then thedecision makers will profit.

(b)   There exists a decrease in marginal benefit ofeach additional unit goes down as you consume more and more ofthem. Let us consider one example.

Example: Take 3 bottles of coco-cola. When you arethirsty, you will have the first bottle with enjoyment and value itmore than its price and buy without hesitation. For the second one,you are not that much thirsty and value the same bottle not as muchas you previously did. Your thirsty is reduced little by littlewith additional unit of coco-cola and your incentive to buy itfinally disappears.

So, by considering this example we can understand the reason fordecrease in marginal benefits.

(c)    The marginal cost will thereforerise because it is the cost that is relevant to the quantityproduced and does not occur with a zero production. Along withmarginal cost another type of cost called Sunk cost cannot beavoided. Sunk costs are costs that cannot be avoided for anynon-zero units of products and that do not change regardless of thequantity of production.

(d)   Under these conditions, the difference betweenmarginal cost and marginal benefit will increase.

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