To Increase Safety at a Bad Intersection, the Mayor Must

question 425

Multiple Choice

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

• A)install the light because the expected benefit of $400,000 is greater than the cost.
• B)install the light because the expected benefit of $45,000 is greater than the cost.
• C)not install the light because the expected benefit of $45,000 is only equal to the cost.
• D)not install the light because the expected benefit of $40,000 is less than the cost.

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Definitions:

Pounds of Material

A measure of the quantity of material, often used in manufacturing, expressed in pounds.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain amount of goods, multiplied by the standard labor rate.

Direct Labor

Direct labor refers to the wages and salaries paid to employees directly involved in the production of goods or services.

Standard Labor Cost

The predetermined cost of labor that is expected for manufacturing a product or performing a service, used for budgeting and performance evaluation purposes.