An entrepreneur learns that a new machine will increase production but also greatly raise electricity costs. What is the correct decision process?

Correct answer: Compare total cost, possible sales, and profit

The entrepreneur should compare the machine’s total additional cost, including electricity and other operating expenses, with the expected increase in sales and profit. Higher production is not automatically beneficial if the extra output cannot be sold or the added cost is too high. Therefore, a cost-benefit analysis is more responsible than buying immediately or rejecting the machine without calculations.