Problem
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. Project Marginal Cost Marginal Benefit A $ 1 Billion $ 2 Billion B 2 Billion 3 Billion C 5 Billion 7 Billion D 7 Billion 8 Billion.
Which project should the government select to achieve the maximum net benefit?