Which Question Is an Example of Marginal Analysis

question 76

Multiple Choice

Which question is an example of marginal analysis?

• A) What additional output does a family business produce when it hires one more worker?
• B) How do tax cuts change the growth rate of median income?
• C) What is the impact of a trade embargo on labour cost?
• D) Should a commuter take the bus to work instead of driving?

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Definitions:

Variable Costing

An accounting method that includes only variable costs—costs that vary with production level—in the calculation of unit cost.

Net Incomes

The total earnings of a company after all expenses and taxes have been deducted from total revenue.

Variable Costing

A pricing strategy that incorporates solely the variable costs associated with production—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of goods sold, while omitting fixed overhead expenses.

Absorption Costing

A method of accounting that incorporates all costs associated with manufacturing, including direct materials, direct labor, as well as both variable and fixed overhead expenses, into the product's cost.