Consulting Case Interview Practice Questions

Answer: e - A marginal analysis finds the point at which a company no longer receives incremental revenue for its incremental investment in quality. A company should invest in quality up to the point where marginal investment is equal to marginal return. Remember that having perfect quality is not economically efficient.

Key Takeaway: Conducting a marginal analysis is a true value-added tool. This is an escape hatch for any question where you are asked how much you would invest in improving something. Think of the economic concept of marginal revenue. You only want to invest up to the point you earn profit in return.