Which of the following is an incorrect statement?
A)If for an activity MRMC,then do more of it
B)An incentive compensation scheme that increases MR will increase effort
C)Fixed fees have no effect on effort
D)Average cost is relevant to an extent decision

Question

Which of the following is an incorrect statement?
A)If for an activity MR>MC,then do more of it
B)An incentive compensation scheme that increases MR will increase effort
C)Fixed fees have no effect on effort
D)Average cost is relevant to an extent decision

Quizplus · Accepted Answer

Average cost is not relevant to an extent decision; marginal cost is what matters for determining the optimal level of activity.

Which of the Following Is an Incorrect Statement