Question

Cost-Benefit Analysis Problem:

Imagine an individual who is working 20 hours a week for $10 per hour, because, although she would prefer to work 40 hours a week at that wage, she is unable to find full-time employment. Further assume that there is a proposal to reduce the speed limit on inter-state highways, and this would result in the individual spending 1 hour a week more driving. In conducting a cost- benefit analysis of the proposal, should this hour be valued at $10, more than $10, or less than $10? Briefly explain.

Answer 1