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

[A] $500 million.

Step-by-step 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}=(\$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* 100`

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

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