According to the marginal decision rule in economics, a person should consume more of something when the relationship between marginal benefit and marginal cost is which of the following?

Introduction / Context:
The marginal decision rule is a fundamental idea in microeconomics that guides rational choices. It states that individuals and firms should increase an activity as long as the marginal benefit from one more unit exceeds the marginal cost of that unit. This question tests your understanding of that relationship in the context of consumption decisions. Knowing this rule helps in analyzing consumer behavior, production choices, and optimal levels of many economic activities.

Given Data / Assumptions:

• We consider a person deciding how much of a good or activity to consume.
• Marginal benefit is the additional satisfaction or gain from consuming one more unit.
• Marginal cost is the additional cost incurred from that extra unit.
• Four options describe different relationships between benefit and marginal cost.

Concept / Approach:
The marginal decision rule can be summarized as continue doing something until marginal benefit equals marginal cost. Before that point, when marginal benefit is greater than marginal cost, an additional unit increases net benefit. After that point, when marginal cost is greater than marginal benefit, extra units reduce net benefit. Therefore, if we ask whether to consume more, the correct condition is that the benefit from the next unit must be greater than the cost of that unit. This rule helps individuals maximize total net benefit from consumption or production choices.

Step-by-Step Solution:
Step 1: Define marginal benefit as the extra benefit gained from one more unit of consumption. Step 2: Define marginal cost as the extra cost incurred from that same additional unit. Step 3: Recall that rational decision makers seek to maximize net benefit, which is total benefit minus total cost. Step 4: Note that when marginal benefit is greater than marginal cost, each additional unit increases net benefit. Step 5: Conclude that a person should consume more as long as benefit exceeds marginal cost, and should stop when marginal benefit just equals marginal cost.

Verification / Alternative check:
Imagine buying slices of pizza. The first slice gives high satisfaction, so marginal benefit is high relative to the price (marginal cost). As you eat more slices, each extra slice may give less satisfaction. When the extra enjoyment from another slice falls below the price you must pay, marginal cost exceeds marginal benefit, and buying another slice would reduce your overall satisfaction relative to cost. Therefore, the rational stopping point is where marginal benefit equals marginal cost. This example confirms that the condition for consuming more is benefit greater than marginal cost, matching the standard marginal analysis principle.

Why Other Options Are Wrong:
Marginal cost exceeds its benefit is incorrect because if the extra cost is higher than the extra benefit, consuming more reduces net benefit, so a rational person would not increase consumption. Benefit less than marginal cost describes the same situation in different words and is also wrong for the same reason. None of the above is incorrect because there is a well established rule, and benefit greater than marginal cost is a correct statement of that rule. Only option A accurately reflects the marginal decision rule.

Common Pitfalls:
Learners sometimes confuse total benefit and marginal benefit. They may think that as long as total benefit is positive, consuming more is good, even when the marginal benefit from additional units is low. Another pitfall is misreading the condition and reversing it, choosing marginal cost greater than benefit by mistake. To avoid errors, focus on the idea of the next unit and compare its extra benefit with its extra cost. The guiding phrase is do more if marginal benefit exceeds marginal cost and stop when the two are equal.

Final Answer:
A person should consume more of something when its benefit exceeds its marginal cost, in line with the marginal decision rule.