A consumer chooses an optimal consumption point where the:

• A. total benefit equals total cost
• B. consumer surplus is zero
• C. marginal benefit equals the marginal cost
• D. willingness to pay is less than the market price

Answer: (C)

Verified step by step guidance

1. Understand the concept of optimal consumption: it occurs where the consumer maximizes their net benefit, which is the difference between total benefit and total cost.
2. Recall that total benefit equals total cost at the optimal consumption point means the consumer's net benefit is zero, implying no consumer surplus.
3. Define marginal benefit (MB) as the additional benefit from consuming one more unit, and marginal cost (MC) as the additional cost of that unit.
4. Recognize that the condition for optimal consumption is where marginal benefit equals marginal cost, i.e., \(\text{MB} = \text{MC}\), because consuming beyond this point would reduce net benefit.
5. Note that if willingness to pay is less than the market price, the consumer would not purchase the good, so this condition does not describe the optimal consumption point.