Incremental analysis includes two concepts
Incremental cost
Incremental revenue
IC is the additional cost incurred for additional output. In other words changes in cost due to changes in level of output.
Whereas IR is the additional revenue from additional output or the changes in revenue due to changes in output.
For every business decisions there is IR and IC. In order to determine whether the decision is sound or not we should compare the IC and IR of every decision.
If the IR exceeds the IC, or IR is equal to IC the decision can be assumed as a sound decision.
nature of managerial economics?
scope of managerial economics
Explain Managerial economics is economics applied in decision making?
significance of managerial economics is decesion making
responsibilities of managerial eeconomic
ABAY
nature of managerial economics?
scope of managerial economics
Explain Managerial economics is economics applied in decision making?
what is the role of managerial economics in Pakistan
significance of managerial economics is decesion making
responsibilities of managerial eeconomic
The incremental reasoning is used in accepting or rejecting a business proposition or option. Whenever a manager takes decision he asks the question "Is it worthwhile?" The implicit criterion is that incremental benefit of the decision should exceed its incremental costs. Decision or action is worthwhile already if the decision maker or is the firm can expect to be better off than before. Original reasoning forces manager to examine the changes in total revenues and total costs resulting for changes in production, sales, price and related decisions. Wrong decisions may follow if the focus is on the concept of average rather than on marginal analysis.The two basic components of incremental reasoning are 1) Incremental cost 2) Incremental Revenue
what is the importance of managerial economics principles in the modern organization?
about scope of managerial economics?
difference between economics and managerial economics
Lawrence Southwick has written: 'Managerial economics' -- subject(s): Managerial economics