Question

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the marginal rev: 05_10_2018 Multiple Choice cost of more insurance coverage is less than the marginal benefit. cost of more insurance coverage is negative. benefit of more insurance coverage is greater than the total benefit. cost of more insurance coverage is equal to the payment for the extra coverage.

Answer 1

Answer:

a. Cost of more insurance coverage is less than the marginal benefit

Explanation:

The marginal cost is the cost producers incur by the production of one more good. The marginal benefit of a good on the other hand is the utility received from the purchase of one more good or service. If a consumer perceives that the worth of good is less than the market price then they would not make that transaction. However, when the consumer has decided to buy more life insurance s/he is convinced that the marginal benefit from purchasing that good would be higher than the marginal cost of that good.