Suppose that installing an overhead pedestrian walkway would cost a college town $100,000.The walkway is expected to reduce the risk of fatality by 2 percent,and the cost of a human life is estimated at $10 million.The town should
A)install the walkway because the estimated benefit is twice the cost.
B)install the walkway because the estimated benefit equals the cost.
C)not install the walkway, since the cost is twice the estimated benefit.
D)install the walkway, since the cost of even a single life is too great not to take action.

Question

Quizplus · Accepted Answer

The estimated benefit of the pedestrian walkway is the reduction in the risk of fatality, which is 2% * $10 million = $200,000. Since this benefit is twice the cost of the walkway ($100,000), the town should install the walkway. Option A is the best choice.

Suppose That Installing an Overhead Pedestrian Walkway Would Cost a College