If D represents the level of decentralization of corporate decision making,and A and C are positive constants,then Benefits = B × D and Costs = A × D + C × D².The optimal level of decentralization occurs where: A)benefits equal costs. B)costs are equal to zero. C)D = BD - AD - CD² D)D = (B - A)/ 2C

Question

Quizplus · Accepted Answer

The optimal level of decentralization occurs where the marginal benefit equals the marginal cost. Setting the derivative of the benefit function equal to the derivative of the cost function gives D = (B - A)/ 2C.

If D Represents the Level of Decentralization of Corporate Decision