When is there no incentive to either increase or decrease the level of an activity performed?

The scenario where there is no incentive to either increase or decrease the level of an activity performed occurs when marginal benefit equals marginal cost. This condition means that the additional benefit derived from one more unit of an activity (marginal benefit) exactly matches the additional cost of producing that unit (marginal cost).

At this point, the decision-makers face no incentive to change the current level of activity because any additional units would neither generate a surplus benefit nor incur a loss—thus achieving optimal efficiency. This equilibrium ensures that resources are allocated most effectively, maximizing net benefits without creating wastage or shortages.

In contrast, other options do not accurately capture this state of balance. For example, total benefit equaling total cost would indicate a break-even point, where overall profits are zero, but it does not reflect the nuanced decision at the margin. Similarly, marginal benefit equaling total cost isn't a typical condition for decision-making, as total cost represents all costs incurred rather than the incremental decisions at the margin. Lastly, total benefit equaling marginal cost addresses a broader perspective and again doesn’t specifically refer to the critical marginal analysis required for making decisions on increasing or decreasing activities.