If the marginal benefit is greater than the marginal cost, what is the economic implication?

When marginal benefit exceeds marginal cost, it indicates that an action or decision yields more value than the resources expended to achieve it. This concept is central to economic decision-making; when the benefits of an additional unit of a good or service surpass the costs of producing or consuming that unit, it suggests that the overall economic welfare is improving.

Economically, this scenario implies that engaging in that activity will increase total surplus—essentially, the net gain derived from production and consumption. Hence, this situation advocates for proceeding with the action, as it contributes positively to economic efficiency and societal well-being.

In contrast, if marginal cost were to exceed marginal benefit, the decision would lead to inefficiency, where resources could be better allocated elsewhere. The other options do not align with this principle; they either suggest a negative economic outcome or describe concepts unrelated to the relationship between marginal benefit and marginal cost.