Question

A legislative committee is weighing the pros and cons of a clean-air program. if it spends $1 million on the program, the air will be cleaner by 20 percent. if it spends $2 million, the air will be cleaner by 30 percent. if it spends $3 million, the air will be cleaner by 35 percent. after comparing opportunity costs and benefits at the margin, the committee agrees to fund the program with $2 million. why did it not choose to appropriate $3 million?
a. at $3 million, the air is not improved as much as the committee would like.
b. at $3 million, the costs are no longer worth the benefits.
c. it was too much to spend without a guarantee.
d. the air is improved by the same amount whether $2 million or $3 million is spent.

Answer 1

B.) A 3 million, the costs are no longer worth the benefits.