If the marginal cost for the state of Montana to increase the speed limit on its interstate highways to 100 mph is estimated to be $500 per day,then Montana should increase the speed limit to 100 mph
A)only if the marginal benefit received each day is less than $500.
B)as long as the marginal benefit received each day is just equal to or greater than $500.
C)as long as the daily marginal cost is lower than it had been before the speed limit increase.
D)unless the marginal benefit received falls to zero.

Question

Quizplus · Accepted Answer

Since the marginal cost to increase the speed limit is $500 per day, it would make sense for Montana to increase the speed limit to 100 mph as long as the marginal benefit received each day is just equal to or greater than $500. If the marginal benefit is less than $500, then the cost of increasing the speed limit would outweigh the benefits. Option C is not relevant to this scenario, and Option D is not applicable since there will always be some marginal benefit received, even if it is small.

If the Marginal Cost for the State of Montana to Increase