Part of the decision to accept additional business should be based on a comparison of the incremental (differential) costs of th

Question

Vinil7 [7]

4 years ago

10

Part of the decision to accept additional business should be based on a comparison of the incremental (differential) costs of th

e added production with the additional revenues to be received.
True or False

Business

1 answer:

postnew [5] · Answer 1 · 2021-11-27T01:49:34+03:00

Answer:

TRUE

Explanation:

Marginal Benefit is addition to total benefit due to a business decision.

Marginal Cost is addition to total cost due to a business decision.

Marginal Benefit & Marginal Costs are determinants while considering a business decision. A decision will be taken if : Marginal Benefit ≥ Marginal Cost, as entrepreneurial decision maker would be better off or at least neutral while taking decision. If MB < MC , it is loss making for the entrepreneur to take that decision & hence is discouraged to take that.