In order to understand the economic decision rule, it's important to consider the concept of marginal benefit and marginal cost. The marginal benefit is the additional benefit you receive from consuming an additional unit of a good. Marginal cost, on the other hand, is the additional cost incurred from that consumption.
The economic decision rule states that for a rational consumption choice, the marginal benefit should equal the marginal cost. If the marginal benefit of consuming another unit exceeds the marginal cost, it would be beneficial to consume more. Conversely, if the marginal cost exceeds the marginal benefit, it would be better to consume less.
Given the context of the question, let’s examine the provided options:
1. "The additional benefit above what you have already received":
- This describes what marginal benefit is, but it doesn't provide the correct decision rule.
2. "Must equal the marginal cost or the unit will not be consumed":
- According to the economic decision rule, this statement is correct. For an additional unit of the good to be consumed, its marginal benefit must indeed equal the marginal cost. Thus, the correct answer is this option.
3. "Must exceed the sunk cost or the unit will not be consumed":
- Sunk costs are costs that have already been incurred and cannot be recovered. They should not influence current decisions as per rational economic thinking.
4. "Equals the total benefit obtained from total consumption":
- This is incorrect because marginal benefit refers to the benefit from consuming one more unit, not the total benefit from all units consumed.
Thus, the correct answer is:
Must equal the marginal cost or the unit will not be consumed.
