Which of the following costs should be included when analyzing choices within a cost-benefit framework?
A) Average costs.
B) Sunk costs.
C) Marginal costs.
D) Sunk costs and marginal costs.
E) Average costs and opportunity costs.

Question

Quizplus · Accepted Answer

When analyzing choices within a cost-benefit framework, it is important to consider the marginal costs, which are the costs of producing or consuming one additional unit of a good or service. This helps to make informed decisions about whether the benefits of an additional unit outweigh the costs. Average costs are not as relevant in this context because they do not take into account the incremental changes associated with producing or consuming additional units. Sunk costs are not relevant because they are costs that have already been incurred and cannot be recovered, so they should not factor into future decision making. Opportunity costs should be included in the analysis as well, but they are not one of the options provided.

Which of the Following Costs Should Be Included When Analyzing