Economics Homework Help

I’m working on a macro economics writing question and need an explanation to help me understand better.

Central to cost-benefit analysis philosophy is a decision rule. In the short answer, identify a decision rule you would use as a decision-maker to choose between either high-speed rail or a hyperloop project. These should be in non-discounted dollars. Please round to the nearest whole value when presenting your numbers. Explain your reasoning as to why you would select your decision rule, evaluate the data provided above, and use the answers from the earlier questions to decide.

Example: A decision rule is a circumstance in which you would accept or reject a project, hypothesis, and/or policy. For example, my friend wants to go surfing in Santa Monica. The Non-discounted total cost (Accounting + opportunity cost) of driving to Santa Monica is $65 in gas and 1 hour in traffic, decreasing personal utility (level of satisfaction). The non-discounted total benefit is 2.5 hours of surfing time which increases personal utility. Every unit of utility is worth about one dollar of value, and each minute is worth one unit of utility. The two friends agree, If the total non-discounted costs exceed the total non-discounted benefits, then they should not go surfing. They do the following calculation:

• The total non-discounted cost to go surfing is: $65 + (60 utility*$1) = $65 + $60 = $125
• Total non-discounted benefits to going surfing are: $1 x (2.6 x 60) = $1 x 150 = $150
• Our decision rule states: if “Costs” are greater than “Benefits” (C > B) then, They should not go surfing. The above analysis shows C = $125 and B = $150; therefore, $125 is not greater than $150; thus, We should go surfing.