Question

Astart-up company just acquired a big project. The project requires a lot of money. The company must hold off on building its new office to complete the

project. What was the reason for the company's decision

Answer 1

The benefit of completing the project (marginal benefit) does not equal the cost (marginal cost)

Step-by-step explanation:

In order for the company to make a profit, the cost of production must not exceed the benefit (what is made in return) from the production of the product. The company is holding off on building the new office because they have calculated that the revenue generated from this new building would be LESS than the cost required to build the building. (the company would also have calculated the cost to produce the good or service in the new building).