The main goal of using a cost-benefit analysis is to reach a:

• A. level of output that maximizes total revenue
• B. situation where total cost is minimized
• C. decision where marginal benefit equals marginal cost
• D. point where average cost equals average revenue

Answer: (C)

Verified step by step guidance

1. Understand the purpose of cost-benefit analysis: it is a method used to evaluate the benefits and costs of a decision or action to determine the most efficient allocation of resources.
2. Recall the economic principle that optimal decisions are made where the additional benefit from one more unit (marginal benefit) equals the additional cost of that unit (marginal cost).
3. Recognize that maximizing total revenue or minimizing total cost alone does not necessarily lead to the most efficient or optimal decision, because these do not consider the incremental changes.
4. Identify that the point where average cost equals average revenue relates to break-even points, not necessarily optimal decision-making in cost-benefit analysis.
5. Conclude that the main goal of cost-benefit analysis is to find the decision point where marginal benefit equals marginal cost, ensuring resources are used efficiently.