Which of the following is the most appropriate method to determine if an industry is worth pursuing from an economic perspective?

• A. Rely solely on the popularity of the industry in social media trends.
• B. Conduct a cost-benefit analysis to compare the expected benefits and costs of entering the industry.
• C. Choose the industry with the highest government regulation.
• D. Base the decision on the number of competitors currently in the industry.

Answer: (B)

Verified step by step guidance

1. Understand that the goal is to evaluate whether entering an industry is economically worthwhile, which means comparing the potential benefits against the costs involved.
2. Recognize that relying on social media trends or popularity does not provide a rigorous economic assessment, as these factors may be temporary or unrelated to profitability.
3. Know that government regulation level alone does not determine economic viability; it may affect costs but is not a direct measure of profitability or benefit.
4. Consider that the number of competitors indicates market competition but does not directly measure whether the industry is profitable or beneficial to enter.
5. The most appropriate method is to conduct a cost-benefit analysis, which involves calculating and comparing the expected total benefits and total costs of entering the industry to determine if the net benefit is positive.