Suppose that for Jim the marginal benefit (MB) of producing is $60 and that the marginal cost (MC) of producing is $10. Suppose also that his marginal benefit of stealing is $50 and the marginal cost of stealing is $10. Is Jim currently maximizing utility in terms of producing and stealing? If not, should he produce more and steal less, or produce less and steal more to move toward utility maximization?
A. Yes, Jim is maximizing utility.
B. No, Jim is not maximizing utility. Since the MB/MC ratio for producing is less than the MB/MC ratio for stealing, Jim should produce more and steal less.
C. No, Jim is not maximizing utility. Since the MB/MC ratio for producing is greater than the MB/MC ratio for stealing, Jim should produce more and steal less.
D. No, Jim is not maximizing utility. Since the MB/MC ratio for producing is greater than the MB/MC ratio for stealing, Jim should steal more and produce less.
Answer: C
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