Practice prompt · Q:economics-and-market-foundations/marginal-comparison-001

Compare one increment from a declared baseline

Compute the net marginal benefit of an added review and avoid substituting the current total net benefit.

Updated Aug 7, 2026 Review due Nov 7, 2026

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A current review process has $45,000 total expected benefit and $18,000 total expected cost. With one added review, the totals become $55,000 and $24,500. A nonrefundable $20,000 design payment was made last year under both alternatives. What is the net marginal benefit of adding the review?

Choose the best answer. a $27,000, because current total expected benefit less current total expected cost is the value of adding one review. b $3,500, because the added review contributes $10,000 expected benefit and $6,500 expected cost. c Negative $16,500, after charging the prior $20,000 design payment to the added review.

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Answer: b

Choice b. Marginal benefit is $55,000 minus $45,000, or $10,000. Marginal cost is $24,500 minus $18,000, or $6,500. Net marginal benefit is $3,500.