Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Profit maximization focuses solely on revenue, while cost-benefit analysis only considers costs.
B
Profit maximization requires evaluating all costs and benefits to determine the best course of action.
C
Cost-benefit analysis is irrelevant in profit maximization as it only looks at historical data.
D
Both concepts are independent and do not influence each other in business decisions.
Understanding the Answer
Let's break down why this is correct
Answer
Profit maximization and cost-benefit analysis are closely related concepts in evaluating economic profit. Profit maximization means a business aims to make the highest possible profit by increasing revenue and reducing costs. Cost-benefit analysis helps businesses decide whether a project or decision is worth pursuing by comparing the benefits it will bring to the costs it will incur. For example, if a company considers launching a new product, it will look at the expected sales (benefits) against the production and marketing expenses (costs) to see if it will increase profits. By using both approaches, businesses can make informed choices that align with their goal of maximizing economic profit.
Detailed Explanation
To maximize profit, a business must look at both costs and benefits. Other options are incorrect because This answer suggests that profit maximization only cares about money coming in; This option says cost-benefit analysis doesn't matter for profit maximization.
Key Concepts
profit maximization
cost-benefit analysis
Topic
Economic Profit Evaluation
Difficulty
medium level question
Cognitive Level
understand
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