Final answer:
Avoidable costs are relevant because they differ between alternatives, providing insight into which decision may lead to greater profitability and cost management in business activities. The correct answer is option: C: differ between alternatives.
Step-by-step explanation:
Avoidable costs are relevant in decision making because they differ between alternatives. In the context of business and economics, costs can be divided into fixed and variable categories. Fixed costs, also known as sunk costs, are incurred before production and cannot be changed; therefore, they are irrelevant to future decision-making.
On the other hand, variable costs can be altered and are directly related to the firm's production activities, often showing diminishing marginal returns. When making decisions, it is crucial to consider only costs that can change as a result of choosing one alternative over another. These are the avoidable costs, which provide valuable information about a firm's potential to increase profit and manage expenses in relation to its production decisions.