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8 October, 01:54

Marginal analysis involves comparing the additional or extra benefit derived from consuming an additional unit of a product or service to the additional cost of consuming that unit of the product or service.

A. True

B. False

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Answers (1)
  1. 8 October, 02:05
    0
    A. True

    Explanation:

    Marginal refers to something extra. Marginal analysis refers to the analysis of comparing additional benefits of an activity with respect to additional costs attributable to that activity.

    Marginal analysis takes into account the comparison between marginal utility and marginal costs.

    Marginal utility refers to the addition to total utility when an additional unit of a product is consumed. Similarly, Marginal cost refers to the addition to total cost when an additional unit of a product is consumed.

    Marginal Analysis serves as a tool for decision making in the sense, such an analysis reveals which activities are worth taking up and which processes need to be discontinued.
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