The traditional profit maximization objective uses the marginal analysis – this profit maximization model of firm behaviour is rich in decision making implications. The marginal/incremental decision rules that are derived from profit max provide very useful guidelines for resource allocation decision. If incremental cost is defined as the change in total cost resulting from a decision and if incremental revenue is defined as the change in total revenue resulting from a decision, then any business decision is profitable of one of these results occur:
- It increases incremental revenue more than incremental costs.
- It decreases some incremental costs more than it increases others (assuming revenues remain constant)
- It increases some incremental revenues more than it decreases others (assuming costs remain constant)
- It reduces incremental costs more than incremental revenue.
Latest posts by BMS Team (see all)
- Meterdown Annual Festival is back with its 7th edition – Starts today! - January 16, 2020
- Tybms sem 6 results 2019 declared on 19th June 2019 - June 19, 2019
- TYBMS Sem 6 Results 2019 Update from BMS khabri! - June 15, 2019