To determine the quantity of any activity that will maximize total profit,economists employ the:

Question

Quizplus · Accepted Answer

The principle of marginal analysis states that economic agents should continue to engage in an activity as long as the marginal (additional) benefit exceeds the marginal (additional) cost. Thus, to determine the quantity of any activity that will maximize total profit, economists employ the principle of marginal analysis. This involves comparing the marginal cost and marginal revenue of each unit of output produced, and continuing production until marginal revenue equals marginal cost, which maximizes total profit. The average decision rule and principle of average analysis do not account for the marginal benefit and cost of each unit, while the total decision rule is too broad and does not provide detailed guidance on optimal decision-making.

To Determine the Quantity of Any Activity That Will Maximize