According to the Profit-Maximizing Principle of Marginal Analysis,if the Marginal

question 71

Multiple Choice

According to the profit-maximizing principle of marginal analysis,if the marginal benefit is _____ the marginal cost,_____.

• A)more than;an activity should be reduced
• B)less than;an activity should be reduced
• C)equal to;an activity should be reduced
• D)more than;net benefit is maximized

---

Definitions:

Net Income

The profit a company has after all expenses, taxes, and costs have been subtracted from total revenue.

Cash Dividends

Payments made by a corporation to its shareholders, usually in the form of cash, as a distribution of the company’s earnings.

Direct Method

A technique used in accounting to prepare the cash flow statement, where actual cash flows from operating activities are reported instead of adjustments to net income.

Operating Activities

Activities that constitute the primary or main activities of an entity, such as selling goods and services, which are reflected in the statement of cash flows.