Question

Suppose that stricter emissions standards would reduce​ health-care costs by ​$70 million but increase the costs of fuel and emissions equipment by ​$40 million. is it sensible to tighten the emissions​ standards?

Answer 1

This is asking for a cost-benefit analysis. This simply means look at the cost of the change and see if the benefit is greater than the cost.

In this case, the cost would be $40 million but there is a benefit (cost savings) of $70 million.

Since the benefit outweighs the cost, it is a good idea.