Economics involves marginal analysis because:

• A. total costs and total benefits are always equal in economic decisions
• B. resources are unlimited and choices do not require trade-offs
• C. decision-makers compare the additional benefits and additional costs of an action
• D. all economic choices are made without considering opportunity costs

Answer: (C)

Verified step by step guidance

1. Understand the concept of marginal analysis: it involves comparing the additional (marginal) benefits and additional (marginal) costs of a decision to determine if the action should be taken.
2. Recognize that economic decisions are made under scarcity, meaning resources are limited and choices require trade-offs, so decision-makers must evaluate the incremental impact of their choices.
3. Recall that total costs and total benefits are not always equal; instead, decisions hinge on whether the marginal benefit exceeds the marginal cost.
4. Note that opportunity cost is a fundamental concept in economics, meaning all choices involve considering what is given up when making a decision.
5. Conclude that the correct reason economics involves marginal analysis is because decision-makers compare the additional benefits and additional costs of an action to make rational choices.