The following data are for a series of increasingly extensive ?ood-control projects. $$\begin{array} { | l | c | c | }
\hline & \text { Total Cost per Year } & \text { Total Benefit per Year } \
\hline \text { Plan } A = \text { Levees } & \$ 10,000 & \$ 16,000 \
\hline \text { Plan } B = \text { Small Reservoir } & 24,000 & 36,000 \
\hline \text { Plan C = Medium Reservoir } & 44,000 & 52,000 \
\hline \text { Plan } D = \text { Large Reservoir } & 72,000 & 64,000 \
\hline
\end{array}$$ For Plan D marginal costs and marginal bene?ts are
A) $72,000 and $64,000, respectively.
B) $28,000 and $12,000, respectively.
C) $24,000 and $18,000, respectively.
D) $16,000 and $28,000, respectively.

Question

The following data are for a series of increasingly extensive ?ood-control projects. $$\begin{array} { | l | c | c | } 
\hline & \text { Total Cost per Year } & \text { Total Benefit per Year } \
\hline \text { Plan } A = \text { Levees } & \$ 10,000 & \$ 16,000 \
\hline \text { Plan } B = \text { Small Reservoir } & 24,000 & 36,000 \
\hline \text { Plan C = Medium Reservoir } & 44,000 & 52,000 \
\hline \text { Plan } D = \text { Large Reservoir } & 72,000 & 64,000 \
\hline
\end{array}$$ For Plan D marginal costs and marginal bene?ts are
A) $72,000 and $64,000, respectively.
B) $28,000 and $12,000, respectively.
C) $24,000 and $18,000, respectively.
D) $16,000 and $28,000, respectively.

Quizplus · Accepted Answer

Marginal costs and benefits are the changes in costs and benefits from moving from one plan to the next more expensive plan. For Plan D, the marginal cost is the difference in total cost between Plan D and Plan C ($72,000 - $44,000 = $28,000), and the marginal benefit is the difference in total benefit between Plan D and Plan C ($64,000 - $52,000 = $12,000).

The Following Data Are for a Series of Increasingly Extensive