The optimum level for a firm's diversification is where:
A)Marginal bureaucratic costs are greater than marginal economic benefit.
B)Marginal economic benefit is less than marginal bureaucratic costs.
C) Total bureaucratic costs equal marginal economic benefits.
D) Marginal bureaucratic costs equal marginal economic benefits.

Question

The optimum level for a firm's diversification is where:
A)​Marginal bureaucratic costs are greater than marginal economic benefit.
B)​Marginal economic benefit is less than marginal bureaucratic costs.
C) ​Total bureaucratic costs equal marginal economic benefits.
D) ​Marginal bureaucratic costs equal marginal economic benefits.

Quizplus · Accepted Answer

The optimum level for a firm's diversification is where marginal bureaucratic costs equal marginal economic benefits. This means that the additional cost of diversifying (bureaucratic costs) is equal to the additional benefit (economic benefits) that the firm can gain from diversification. At this point, the benefits of diversification are maximized without incurring excessive costs.

The Optimum Level for a Firm's Diversification Is Where