If one defines incremental cost as the change in total cost resulting from a decision,and incremental revenue as the change in total revenue resulting from a decision,any business decision is profitable if:
A) it increases revenue more than costs or reduces costs more than revenue
B) it decreases some costs more than it increases others (assuming revenues remain constant)
C) it increases some revenues more than it decreases others (assuming costs remain constant)
D) all of the above
E) b and c only

Question

Quizplus · Accepted Answer

All the options describe scenarios where a business decision would be considered profitable. Option A outlines the general principle of profitability, where the increase in revenue is greater than the increase in costs or the reduction in costs is greater than the reduction in revenue. Options B and C provide specific cases under the assumption that either revenues or costs remain constant, respectively. Thus, all these conditions align with the definition of profitability based on incremental cost and revenue, making option D correct.

If One Defines Incremental Cost as the Change in Total