The Concept of Marginal or Incremental Analysis Helps Decision Makers

question 33

Multiple Choice

The concept of marginal or incremental analysis helps decision makers to:

• A)determine global competition.
• B)analyze trade agreements.
• C)project government expenditures.
• D)analyze gross national product.
• E)optimize returns or minimize costs.

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Definitions:

Marginal Product

The supplementary yield achieved by the utilization of one additional unit of a variable factor, with all other resources remaining fixed.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent or salaries, over a relevant period.

Variable Cost

Refers to expenses that vary directly with the level of production or output, such as raw materials and labor costs.

Total Cost

The full price of manufacturing that incorporates both stable and changing expenses.