What Are Relevant Costs? How Do They Relate to Decision

question 22

Essay

What are relevant costs? How do they relate to decision making?

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Definitions:

Limited Income

Describes a situation where an individual or household has a finite or restricted amount of monetary resources available for spending and saving.

Marginal Utilities

The gain in utility or enjoyment a consumer realizes from the consumption of one extra unit of a good or service.

Extra Total Utility

The additional satisfaction or benefit that a consumer derives from consuming one more unit of a good or service.

Current Consumption

The amount of goods, services, energy, or natural resources being used by consumers or industries at the present time.