When deciding whether or not to undertake an activity, economists compare:

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Economists use the cost-benefit analysis approach to decision-making. This involves comparing the additional costs of an activity with the additional benefits received. By doing so, they can determine whether or not an activity is worth pursuing based on the net benefit it provides. A and B are incorrect because they do not take into account the incremental or marginal costs and benefits. D is incorrect because it compares the average cost to the total benefits, which is not an appropriate comparison.

When Deciding Whether or Not to Undertake an Activity, Economists