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The government invested $10 million in an infrastructure project two years ago. The amount of money...

The government invested $10 million in an infrastructure project two years ago. The amount of money was spent on wages and material costs, which cannot be recovered. This year, the government realizes that she needs to invest another $4 million in the project because of construction delays, while the $11 million expected revenue remains unchanged and can only be generated upon the completion of the project. The government should __________the additional budget because __________.

Select one:

a. approve; marginal benefit of the extra payment is greater than its marginal cost.

b. approve; the project can generate positive revenue.

c. disapprove; the government will suffer from a $3 million loss

d. disapprove; the cost is higher than expected

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Q. The government invested $10 million in an infrastructure project two years ago. The amount of money was spent on wages and material costs, which cannot be recovered. This year, the government realizes that she needs to invest another $4 million in the project because of construction delays, while the $11 million expected revenue remains unchanged and can only be generated upon the completion of the project. The government should __________the additional budget because __________

Answer- (c) disapprove; the government will suffer from a $3 million loss.

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