The owners of Uptown Apartments are leaning toward not improving the apartment complex; they believe that the increas...

amajerus on November 1, 2022

Why is A correct?

I did not choose A because the cost/benefit analysis did not seem similar enough to be parallel. In A, part of the benefit seems to actually outweigh the cost that they were considering in the first place. In A, the benefit of exercise doesn't actually impact the cost (pain of surgery). In other words, it seemed to me that the stimulus was arguing that the cost wouldn't happen at all, since they would be able to cover the cost of the renovations with the extra income. A seemed really different since being able to exercise wouldn't solve the problem of having pain after surgery. Should I instead have looked more generally, and assumed that it is correct merely because it is a cost-benefit analysis? Or is there something else that I am missing? Thank you!!

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Emil-Kunkin on November 5, 2022

Hi,

I think you may be looking at it too granularly, however, I disagree that the stimulus has the cost going away. The company still has to spend the money. It is an investment, and just because it is likely to be paid back does not mean that the cost simply does not exist. The housing market could tank, or the builder could run off with the money. In both cases, the author says that one should take an action despite the fact that the immediate cost/benefit does not pay off, because an extra factor makes the cost worth the benefit by increasing the benefit.