Marginal Analysis Refers to

question 268

Multiple Choice

Marginal analysis refers to

• A)a continuing,concise trade-off of incremental costs against incremental revenues.
• B)the change in total cost that results from producing and marketing one additional unit of a product.
• C)a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
• D)a continuing concise trade-off of incremental ROI and incremental ROA.
• E)a technique that analyzes the relationship between revenues,profit,and market share relative to changes in market growth rates.

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and labor.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance expenses.

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Variable Costs

Costs that change in direct proportion to changes in levels of activity or production volume, such as materials and labor.