Suppose that the government is trying to decide between allocating its resources to build more dams or to build more freeways. In terms of forgone dams, as more freeways are constructed, the marginal benefit of additional freeways ________ and the marginal cost of additional freeways________.

Question

Quizplus · Accepted Answer

As more freeways are constructed, the marginal benefit of additional freeways decreases because the most critical needs are met first. Conversely, the marginal cost increases because resources are diverted from building dams, which are now forgone.

Suppose That the Government Is Trying to Decide Between Allocating