Final answer:
The calculation of an amount, given different levels of a factor, is known as what-if analysis. This type of analysis helps businesses conduct cost/benefit analysis and understand their cost structures. It is essential for strategic decision-making regarding production and pricing. Therefore, the correct option is B.
Step-by-step explanation:
The calculation of an amount, given different levels of a factor that influences that amount, is known as b) what-if analysis. What-if analysis is a tool used to understand how different values of an independent variable affect a particular dependent variable under a given set of assumptions. This type of analysis is widely used in risk assessment, cost function determination and for making strategic decisions in business.
Such calculations are crucial for businesses to perform cost/benefit analysis, which is a decision-making process where a firm compares what will be sacrificed and what will be gained. Weighing marginal costs and marginal benefits helps in determining the profitability of producing additional units and aids in maximizing profits.
Understanding the cost structure of a firm, including fixed and variable costs, is essential for making informed decisions about production quantities and pricing strategies to ensure long-term profitability. Properly applied, what-if analysis can play a central role in these strategic business decisions.