In the 1800s, the federal government paid railroad companies for each mile of track built. This payment scheme created incentives for railroad companies to lay track:

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Re-expressing the scenario helps frame why the incentives shaped the outcome. When payment is granted per mile of track constructed, the amount of money earned scales with total miles laid, not with speed, efficiency, or quality of materials by itself.
Option A: 'as slowly as possible.' This is not tied to the per-mile payment structure. Speed of construction has no bearing on the payment rate, so this option misidentifies the driver of behavior.
Option B: 'between points A and B using the most direct route.' A direct route minimizes the distance and, therefore, the number of miles built. Since the government pays by mile, building a shorter, more direct route would reduce revenue for the company, making this option inconsistent with the incentive.
Option C: 'between points A and B using the most indirect route.' This aligns with the per-mile payment incentive. By choosing longer, winding paths that add unnecessary miles, railroad companies could maximize the total miles constructed and thus increase their earnings, even if the route is inefficient.
Option D: 'using the best materials possible.' While material quality matters for strength and durability, the per-mile payment scheme focuses on the length of track, not necessarily the quality or durability of materials. This option fails to capture the primary incentive created by paying per mile and could be pursued alongside average or high-quality materials, but it does not explain the motive to maximize miles.
In summary, the per-mile payment structure encourages maximizing the number of miles laid, which would often mean opting for longer, more indirect routes rather than shorter, direct ones, making Option C the most consistent with the incentive.

ECON 201 Quiz 1: Chs 1 and 2 on Key Ideas & the PPF

In the 1800s, the federal government paid railroad companies for each mile of track built. This payment scheme created incentives for railroad companies to lay track:

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