Question

Suppose the college administrators estimate that the beautification initiative will cost $17,340. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 1,020 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $16. The benefit of the beautification initiative, as suggested by the survey, is. Because the estimated benefit isless than the cost, the college administratorsshould not undertake the beautification initiative.

Answer 1

Explanation:

Cost: The estimated cost of the beautification initiative is $17,340.
Benefit: The average willingness to pay from the survey of 1,020 students is $16. Therefore, the total willingness to pay based on the survey is 1020 students * $16/student = $16,320.
Cost-benefit comparison: Comparing the cost and benefit, we see that $16,320 (benefit) is less than $17,340 (cost).
Therefore, the estimated benefit of the initiative falls short of the cost by $17,340 - $16,320 = $1,020.