A "how much" decision is BEST made by comparing the _____ of an action to the _____ of that action.
A)explicit costs;implicit costs
B)accounting profit;economic profit
C)marginal benefits;marginal costs
D)present value;net present value

Question

Quizplus · Accepted Answer

When making a "how much" decision, we are essentially looking at the marginal benefits (additional benefits) of taking a particular action as compared to the marginal costs (additional costs) of that action. This comparison between marginal benefits and marginal costs helps us determine whether or not the decision will be rational and efficient. Therefore, option C which involves comparing the marginal benefits to the marginal costs provides the best answer. Option A involves explicit and implicit costs, which are not relevant in this context. Option B involves accounting profit and economic profit, which are also not relevant to this particular decision-making process. Option D involves present value and net present value, which are relevant, but not as relevant as comparing marginal benefits and marginal costs.

A "How Much" Decision Is BEST Made by Comparing the _____