The cost-benefit principle

Question

Quizplus · Accepted Answer

The cost-benefit principle states that an action should be taken only if the extra benefit is greater than the extra cost. This means that the additional benefit gained from an action should outweigh the additional cost incurred. Option A is incorrect because it does not consider the marginal or additional benefit and cost. Option B is incorrect because it suggests considering the cost of all alternatives, which is not necessary in applying the cost-benefit principle. Option D is incorrect because it looks at the average benefit and cost rather than the additional benefit and cost. Option E is incorrect because it suggests taking an action when the extra cost is greater than the extra benefit, which goes against the principle.

The Cost-Benefit Principle