1. Two alternative programs to save 50 more lives per year entail providing more cardiac intensive care facilities and redesigning dangerous highway interchanges. The price of a new cardiac intensive care unit is $500,000, and the price of redesigning and renovating a highway interchange is $1 million. One combination of the two programs that can save 500 lives is five cardiac units and three highway exit renovations. a.) Is the mix involving five cardiac units and three highway exit renovations cost-effective? b.) Assuming that the marginal products of both programs decline, what needs to be done to achieve the cost-effective mix of programs?

1. Two alternative programs to save 50 more lives per year entail providing more cardiac intensive care facilities and redesigning dangerous highway interchanges. The price of a new cardiac intensive care unit is $500,000, and the price of redesigning and renovating a highway interchange is $1 million. One combination of the two programs that can save 500 lives is five cardiac units and three highway exit renovations. a.) Is the mix involving five cardiac units and three highway exit renovations cost-effective? b.) Assuming that the marginal products of both programs decline, what needs to be done to achieve the cost-effective mix of programs?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Two alternative programs to save 50 more lives per year entail providing more cardiac intensive care facilities
and redesigning dangerous highway interchanges. The price of a new cardiac intensive care unit is $500,000, and
the price of redesigning and renovating a highway interchange is $1 million. One combination of the two
programs that can save 500 lives is five cardiac units and three highway exit renovations.
a.) Is the mix involving five cardiac units and three highway exit renovations cost-effective?
b.) Assuming that the marginal products of both programs decline, what needs to be done to achieve the cost-effective
mix of programs?

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