Optimal decisions are made on the basis of
A)rate of growth in total profit.
B)average cost and average revenue figures.
C)impact on market share.
D)marginal cost and marginal revenue figures.

Question

Quizplus · Accepted Answer

Optimal decisions are made by comparing the marginal cost (cost of producing one more unit) and marginal revenue (revenue earned by producing one more unit) figures. This is because the decision maker seeks to produce at a level where the marginal cost is equal to marginal revenue, as this is where profit is maximized. Marginal analysis helps in making efficient and effective business decisions. Therefore, choice D is the best choice.

Optimal Decisions Are Made on the Basis of