Making a Decision "On the Margin" Involves Comparing

question 16

Multiple Choice

Making a decision "on the margin" involves comparing:

• A) additional benefits against additional costs.
• B) total benefits against total costs, which include benefits and costs from past decisions.
• C) sunk costs against opportunity costs.
• D) the most benefit you could expect to get without considering costs.

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Definitions:

Net Profit Margin

A financial ratio indicating the percentage of revenue that remains as net profit after all expenses are deducted from total revenues.

Leverage

The use of various techniques or borrowed capital (debt) to increase the potential return of an investment.

Outsourcing

Transferring a firm’s activities that have traditionally been internal to external suppliers.

External Suppliers

Third-party companies or entities that provide products or services to another company as part of the supply chain, outside of the purchasing company's organization.