Question

Explain incremental revenue and incremental cost.

Answer 1

Inremental Revenue is the portion of revenue that is increased from choosing another alternative from first alternative.

For example, option 1 gives revenue of 120000 and option 2 gives revenue of 150000, incremental revenue from choosing option 2 is 30000.

Inremental Cost is the portion of cost that is increased from choosing another alternative from first alternative.

For example, option 1 gives cost of 80000 and option 2 gives cost of 90000, incremental cost from choosing option 2 is 10000