Question

Optimization using total value calculates ________.

A) the total net benefits of different alternativesB) only the benefits of an alternative and not the costsC) only the costs of an alternative and not the benefitsD) the change in net benefits resulting from a shift from one alternative to another

Answer 1

A

Step-by-step explanation:

Optimization using total value calculates the total value of each feasible option and then picks the option with the highest total value.

Optimization using marginal analysis calculates the change in total value when a person switches from one feasible option to another, and the uses these marginal comparisons to choose the option with the highest total value.

Both gives identical answers.

Optimization can be implemented using many different techniques.

One of it, is Total value total benefit - total cost (net benefit).

It translate all cost and benefits into common units, like dollar per month.

Calculate the total net benefit of each alternative.

Pick the alternative with the highest net benefit.