Question

1. The city of Austin can build roads or light rail. If 10 miles of roads cost $1 million and 2 miles of light rail cost $10 million, the city’s cost of 100 miles of light rail is
[A] $500 million
[B] 10 miles of road
[C] 5000 miles of road
[D] $50 million
[E] Both [A] and [C] are correct.

Answer 1

Answer:

[A] $500 million.

Explanation:

We have been given that the city of  Austin can build roads or light rail. If 10 miles of roads cost $1 million and 2 miles of light rail cost $10 million. We are asked to find the opportunity cost of 100 miles of light rail.

First of all, we will find cost of 1 mile of railroad.

$\text{Cost of 1 mile of light rail}=\frac{\ 10,000,000}{2}$

$\text{Cost of 1 mile of light rail}=\ 5,000,000$

$\text{Cost of 100 miles of light rail}=\ 5,000,000\times 100$

$\text{Cost of 100 miles of light rail}=\ 500,000,000$

Therefore, the cost of 100 miles of light rail is $500 million.