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how knowledge of marginal analysis can be used to approximate the extra cost, extra revenue or...

how knowledge of marginal analysis can be used to approximate the extra cost, extra revenue or extra profit of increasing production?(100 words reply)

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Answer #1

Suppose there is an company who is able to measure its Additional benefits as well as cost of an extra Economic activity. So the Marginal analysis says that the moment marginal benefit exceeds marginal cost , then the manager of the company should increase the activity in order to reach the highest net benefit. On the other hand if marginal cost exceed marginal revenue then he should Decrease the activity. So firm changes it's activity according in the basis of this theory until and unless it reacher the condition of marginal revenue is equal to marginal profit

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