Rational people act only if the marginal benefit exceeds the marginal cost?

Question

true or false?

Answer 1

True (in general) - though if MC>MB they act too but in opposite direction, and there might be indifference range if MB=MC

Answer 2

MARGINAL COST IS GREATER THAN MARGINAL BENEFITS

The rational consumer tries to maximise the benefits to themselves, and to do this they will continue to consume until they no longer gain a benefit [Marginal Cost (MC) is greater than the Marginal Benefit (MB)]. Once MC exceeds MB it is not longer economically efficient to continue to consume - at least in theory.

MARGINAL COST EQUALS MARGINAL BENEFITS

However, if MC and MB are equal, than there is just as much lost as there is gained, so the consumer may or may not consume; it is rational for them not to, since it confers no additional benefits over the costs, but it is also rational for them to to consume, because the costs have not exceeded the benefits. (Both outcomes are equally efficient, since nothing has been lost, or the same amount of value has been obtained, depending on which way you look at it.)

LIMITATIONS OF MARGINAL UTILITY THEORY

The theory of the rational consume maximising his/her utility does not take into account other costs, such as opportunity costs (e.g. I only have $5.00 in my wallet and both products are $5.00 each), nor do they take into account the cost of time, which is partially linked to opportunity cost (e.g. to consume an additional unit I must spend 30 minutes to travel to the store, thus not being able to watch my favourite TV show). Hence, although in pure utility theory a consumer may be acting irrationally, in reality they may be factoring in many other costs that the theory doesn't even consider, and thus they may be acting rationally.