Reference no: EM132479900

The Corps of Engineers has done a study and Congress is considering a flood control system. The dam and flood control system can be constructed in different sizes or stages, offering different levels of costs and benefits. The following data reflect the best available regarding costs and benefits.

Stage Total Cost Total Benefits

1 $ 55,800 $ 60,000

2 66,900 78,000

3 78,000 95,000

4 90,000 107,000

5 101,400 117,000

6 110,600 122,000

Both costs and benefits are total amounts-in thousands of dollars. These are merely alternative levels or stages between which to choose. That is, Stage 2 includes everything in Stage 1, but the total cost of building a Stage 2 dam is $66,900.

Question: Should congress build the dam/flood control system at a smaller scale project, which, of course, will cost less and will provide only limited flood control benefits, OR should congress go all out and build a much larger (higher stage) structure that will yield even greater flood control benefits, but also provide recreational and other benefits.