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31 January, 10:45

Part of the decision to accept additional business should be based on a comparison of the incremental (differential) costs of the added production with the additional revenues to be received.

True or False

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  1. 31 January, 11:12
    0
    TRUE

    Explanation:

    Marginal Benefit is addition to total benefit due to a business decision.

    Marginal Cost is addition to total cost due to a business decision.

    Marginal Benefit & Marginal Costs are determinants while considering a business decision. A decision will be taken if : Marginal Benefit ≥ Marginal Cost, as entrepreneurial decision maker would be better off or at least neutral while taking decision. If MB < MC, it is loss making for the entrepreneur to take that decision & hence is discouraged to take that.
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