1.

The following data are for a series of increasingly extensive flood control projects: Total cost per year Total benefit per year Plan A levees $10,000 $16,000 Plan B small reservoir 24,000 36,000 Plan C medium reservoir 44,000 52,000 Plan D large reservoir 72,000 64,000 R-1 REF30012 Refer to the above data. For Plan D marginal costs and marginal benefits 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.

2.

The following data are for a series of increasingly extensive flood control projects: Total cost per year Total benefit per year Plan A levees $10,000 $16,000 Plan B small reservoir 24,000 36,000 Plan C medium reservoir 44,000 52,000 Plan D large reservoir 72,000 64,000 R-1 REF30012 Refer to the above data. On the basis of benefit-cost analysis government should: A. undertake Plan D. B. undertake Plan C. C. undertake Plan B. D. undertake Plan A.

3.

The following data are for a series of increasingly extensive flood control projects: Total cost per year Total benefit per year Plan A levees $10,000 $16,000 Plan B small reservoir 24,000 36,000 Plan C medium reservoir 44,000 52,000 Plan D large reservoir 72,000 64,000 R-1 REF30012 Plan C above entails: A. marginal benefits in excess of marginal costs. B. fewer spillovers than either Plan A or Plan B. C. an overallocation of resources to flood control. D. an underallocation of resources to flood control.

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