Final answer:
Marginal or incremental analysis helps decision makers optimize returns or minimize costs by examining the benefits and costs of small changes in the quantity of a good produced. It is a method used in economics to make the most effective decisions on the margin.
Step-by-step explanation:
The concept of marginal or incremental analysis is a critical component in economics that helps decision makers optimize returns or minimize costs. It involves assessing the additional benefits and costs of producing a little more or a little less of a good, which is akin to 'change analysis.' This approach is not about making an all-or-nothing choice but rather about making decisions on the margins. It allows for understanding how each additional unit affects overall benefits and costs, which is especially relevant in light of the law of diminishing marginal utility, stating that the utility gained from each additional unit tends to decrease.
Therefore, when it comes to the provided options, the correct answer is A. optimize returns or minimize costs. This is because marginal analysis aims to make the most effective incremental changes in economic decisions, such as production levels, pricing, resource allocation, and more, in order to achieve an optimal outcome.