If a decision maker uses marginal analysis, then the relevant costs are the
A)full costs of a particular activity or product.
B)fixed costs that do not vary with the extra activity or output.
C)profits obtained on the activity or product.
D)average costs for a particular activity or product.
E)additional costs of a particular activity or product.

Question

Quizplus · Accepted Answer

Marginal analysis focuses on the additional costs and benefits of engaging in a particular activity or producing an additional unit of output. Therefore, the relevant costs in marginal analysis are the additional or marginal costs. Choice E best represents the concept of marginal costs.

If a Decision Maker Uses Marginal Analysis, Then the Relevant