A government is considering undertaking one or more construction projects.The estimated marginal cost and benefit of each project are given in the table. Refer to the above table and information.What is the total cost and total benefit of projects 1,2,and 3?
A) Total cost is $18 million and total benefit is $19 million.
B) Total cost is $24 million and total benefit is $27 million.
C) Total cost is $37 million and total benefit is $41 million.
D) Total cost is $65 million and total benefit is $66 million.

Question

A government is considering undertaking one or more construction projects.The estimated marginal cost and benefit of each project are given in the table.  Refer to the above table and information.What is the total cost and total benefit of projects 1,2,and 3?
A) Total cost is $18 million and total benefit is $19 million. 
B) Total cost is $24 million and total benefit is $27 million. 
C) Total cost is $37 million and total benefit is $41 million. 
D) Total cost is $65 million and total benefit is $66 million.

Quizplus · Accepted Answer

To determine the total cost and total benefit of projects 1, 2, and 3, we simply add up the marginal costs and benefits of each project:
Total cost = $10 million + $8 million + $19 million = $37 million
Total benefit = $11 million + $10 million + $20 million = $41 million
Therefore, the best choice would be to undertake all three projects, as their total benefit outweighs their total cost.

A Government Is Considering Undertaking One or More Construction Projects