Assume that the government is deciding whether it should build a hospital in one of the main cities in the country.It will choose to build the hospital only if:
A)the hospital generates positive revenues.
B)the cost of building the hospital is low.
C)the profits from the hospital are positive.
D)the opportunity cost of building the hospital is zero.
E)the total benefits from the hospital exceed total costs.

Question

Quizplus · Accepted Answer

The best choice is E because it considers both the benefits and costs of building the hospital. If the total benefits exceed the total costs, then it would be worth it for the government to build the hospital. The other choices are not sufficient on their own. A positive revenue does not necessarily mean the benefits outweigh the costs, the cost of building the hospital alone does not consider the potential benefits, profits are not the same as overall benefits, and the opportunity cost does not give a clear indication of whether it is worth building the hospital.

Assume That the Government Is Deciding Whether It Should Build