Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue

Exercise 2

It would cost the town of Irondale $50 million to build a gaspowered generator that could produce a maximum of 5 megawatts of electricity at 15 cents per hour. Another alternative would be for Irondale to build a $100 million coal-fired generator that could produce a maximum of 15 megawatts of electricity at 5 cents per hour. Irondale should:
A) Build the coal-fired generator because its hourly operating costs are so much lower.
B) Build the gas-powered generator since it is less expensive to build.
C) Build the coal-fired generator because, while it would cost twice as much to build, it would produce three times as much electricity.
D) Obtain more information before deciding what to do.