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

Question

Patience Stanley

Business

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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Answers (1)

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Isla Massey · Answer 1

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.

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

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