Answer the Question on the Basis of the Following Information

question 128

Multiple Choice

Answer the question on the basis of the following information for four highway programs of increasing scope. All figures are in millions of dollars. The data indicate that

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

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Definitions:

Capital Intensive

Refers to industries or businesses that require large amounts of money to buy, maintain, or improve their assets such as property, plants, and equipment.

Variable Costs

Costs associated with a business that fluctuate according to operational levels.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, highlighting the effects of fixed costs.

Production Process

The sequence of operations or activities involved in producing goods or services, from raw materials to finished products.