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If one defines incremental cost as the change in total cost resulting from a decision, and incremental revenue as the change in total revenue resulting from a decision, any business decision is profitable if:

a it increases revenue more than costs or reduces costs more than revenue

b it decreases some costs more than it increases others (assuming revenues remain constant)

c it increases some revenues more than it decreases others (assuming costs remain constant)

d all of the above

e b and c only

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Solution Summary

Examine premises of incremental costs.

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