Which economic principle states that total benefit should be compared to total cost?

The principle that emphasizes comparing total benefit to total cost is known as cost-benefit analysis. This approach is central to economic decision-making, as it allows individuals, businesses, and governments to evaluate the feasibility and effectiveness of a particular action or project. By assessing whether the anticipated benefits outweigh the incurred costs, decision-makers can determine whether a course of action is worthwhile.

Cost-benefit analysis provides a structured way to quantify and weigh the pros and cons of a decision. In practical terms, if the total benefits of an option exceed its total costs, the option is generally deemed favorable, guiding stakeholders in making informed choices. This principle is widely applied in various fields, including economics, finance, and public policy, to ensure that resources are allocated efficiently and that the potential impacts of decisions are carefully considered.

Other economic principles, while relevant in different contexts, do not specifically focus on this comparison of total benefits versus total costs. For instance, marginal analysis focuses on the additional benefits and costs of producing one more unit or making one more decision, rather than the overall scope. Supply and demand deal with market mechanisms and price determination rather than direct evaluation of benefits and costs. Equilibrium analysis pertains to market stability and balance between supply and demand but does not directly address the concept