Question

The governor has proposed to clean up all the trash on the side of the highway. The project is estimated to cost the tax payers and additional $15,000. The city will benefit by having a clean highway which will entice tourists to stop along their routes. The project is estimated to bring in $12,000 of revenue from the highway being cleaned. Should the governor continue with the project

Answer 1

No, the project will not bring in enough benefit to cover the costs.

Step-by-step explanation:

In a project or business enterprise there is a need to do a cost-revenue analysis with the aim of maximising profit.

If the revenue generated by a project is more than the cost, then it is viable and profitable.

However if the revenue is less than cost then the project will not be sustainable.

In the given scenario the clean up project is estimated to cost the tax payers an additional $15,000.

The city will have an estimated revenue of $12,000 from the highway being cleaned.

As the revenue is less than the cost it is better to discontinue the project.