Asked by Mohamed Nabil on Sep 23, 2024
Verified
Managers undertake an investment only if
A) Marginal revenue is greater than zero
B) Marginal costs is less than marginal revenue
C) Marginal revenue is greater than marginal costs
D) Investment decisions do not depend on marginal analysis
Marginal Revenue
The additional income earned by selling one more unit of a good or service.
Marginal Costs
The change in total production cost that arises when the quantity produced is incremented by one unit.
Investment
The allocation of resources, usually money, in order to gain profitable returns as interest, income, or appreciation in value.
- Discern the economic logic underpinning investment determinations via the comparison of marginal cost with marginal revenue.
Verified Answer
SA
Salman Ahmedabout 7 hours ago
Final Answer :
C
Explanation :
Managers undertake an investment only if the marginal revenue generated from the investment is greater than the marginal cost of the investment. This is because if the marginal revenue is less than marginal cost, the investment will result in a loss rather than profit. Therefore, choice C - Marginal revenue is greater than marginal cost - is the correct answer.
Learning Objectives
- Discern the economic logic underpinning investment determinations via the comparison of marginal cost with marginal revenue.