Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size.All figures are in millions of dollars. $220300\begin{array}{l}\begin{array}{ccc}\underline{\text { Stadium }}&\underline{\text { Total Cost }}&\underline{\text { Total Benefit }}\\\text { A } & \$ 80 & \$ 140 \\\text { B } & 100 & 200 \\\text { C } & 130 & 250 \\\text { D } & 165 & 290 \\\text { E } & 220 & 300\end{array}\end{array}$ Refer to the table.The marginal cost and marginal benefit of stadium B (relative to A) are:

A) $20 million and $50 million,respectively.
B) $100 million and $200 million,respectively.
C) $30 million and $50 million,respectively.
D) $20 million and $60 million,respectively.

Question

Answer the question on the basis of the following table that shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size.All figures are in millions of dollars.

220300\begin{array}{l}\begin{array}{ccc}\underline{\text { Stadium }}&\underline{\text { Total Cost }}&\underline{\text { Total Benefit }}\\\text { A } & \$ 80 & \$ 140 \\\text { B } & 100 & 200 \\\text { C } & 130 & 250 \\\text { D } & 165 & 290 \\\text { E } & 220 & 300\end{array}\end{array}

Refer to the table.The marginal cost and marginal benefit of stadium B (relative to A) are:

A) $20 million and $50 million,respectively.
B) $100 million and $200 million,respectively.
C) $30 million and $50 million,respectively.
D) $20 million and $60 million,respectively.

Trenton VandeGuchte · Accepted Answer

Final Answer : D, Explanation :  The marginal cost of stadium B (relative to A) can be calculated by subtracting the total cost of stadium A from the total cost of stadium B, which is $120 million - $100 million = $20 million.The marginal benefit of stadium B (relative to A) can be calculated by subtracting the total benefit of stadium A from the total benefit of stadium B, which is $260 million - $200 million = $60 million.Therefore, the best choice would be to choose stadium B since the marginal benefit of adding stadium B is greater than the marginal cost of adding stadium B.

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