A new road will lower the cost of a trip between two cities from $20 to $10.Currently, 100,000 trips per year are made between the two points.The benefit of the new road will:

Question

Quizplus · Accepted Answer

With a reduction in cost from $20 to $10, more people are likely to take trips between the two cities. Assuming a 10% increase in the number of trips yearly (conservative estimate), the total trips per year would increase to 110,000. Hence, the total benefit would be $1,100,000 per year (110,000 trips x $10 saved per trip). Therefore, the benefit of the new road will exceed $1 million per year.

A New Road Will Lower the Cost of a Trip