Question

Answer the question on the basis of the following information for four highway programs of increasing scope. All figures are in millions of dollars.
Program Total Cost Total Benefit
A $2 $9
B 6 16
C 12 21
D 20 23

The data indicate that: ____________

a. program D is optimal because it maximizes the total benefit.
b. the marginal cost and marginal benefit of Program A are $2 and $9, respectively.
c. there is no highway program that is economically justifiable on the basis of cost-benefit analysis.
d. the marginal cost and marginal benefit of Program C are $12 and $21, respectively.

Answer 1

Based on the information provided, the program which maximizes total benefit is option B with a total cost of 6 and a total benefit of 10.

What is Cost-Benefit Analysis?

This refers to the process of comparing the costs and benefits of various programs in order to select the one with the most value and or benefit based on the total cost to the individual, business, or country.

Subtracting the cost from the benefits, in the data above, the program which yields the highest is B. Hence B is the correct answer.

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