The optimal use of a resource takes place when which of the following occurs?

• A. Resources are allocated based on the lowest possible cost of production.
• B. Resources are allocated so that marginal benefit equals marginal cost.
• C. Resources are distributed equally among all individuals.
• D. Resources are used to produce the maximum possible output, regardless of consumer preferences.

Answer: (B)

Verified step by step guidance

1. Understand the concept of optimal resource use in microeconomics, which occurs when the allocation of resources maximizes overall efficiency and welfare.
2. Recall that the principle of optimal allocation is based on equating marginal benefit (MB) and marginal cost (MC), meaning resources are used up to the point where the additional benefit from using one more unit equals the additional cost of that unit.
3. Recognize that allocating resources based solely on the lowest cost of production does not guarantee optimal use because it ignores consumer preferences and benefits.
4. Note that distributing resources equally among all individuals does not necessarily lead to optimal use, as it may not reflect differences in preferences or marginal benefits.
5. Understand that producing the maximum possible output without considering consumer preferences can lead to inefficiency, as it may result in producing goods that are not valued as highly by consumers.