In the context of profit maximization, which of the following best describes the purpose of conducting a cost-benefit analysis when allocating resources?

Conducting a cost-benefit analysis is important for profit maximization because it helps businesses understand the potential gains and losses associated with different choices. By comparing the costs of a resource allocation, such as investing in new equipment, against the expected benefits, like increased production and sales, companies can make better decisions. For example, if a bakery considers purchasing a new oven, the analysis would show whether the extra production it allows will lead to higher profits that outweigh the cost of the oven. This process allows businesses to allocate their resources in a way that maximizes their profits while minimizing waste. Ultimately, it ensures that every dollar spent contributes to the overall goal of increasing profitability.