Assume That a Government Is Considering a New Social Program

Multiple Choice

Assume that a government is considering a new social program and may choose to include in this program one of four progressively larger projects. The marginal cost and the marginal benefits of each of the four projects are given in the table below. Suppose that the government chooses to do project C. What is the total cost and total benefit of doing project C?

A) Total cost is $5 billion, and total benefit is $7 billion.
B) Total cost is $4 billion, and total benefit is $7 billion.
C) Total cost is $8 billion, and total benefit is $12 billion.
D) Total cost is $15 billion, and total benefit is $20 billion.