Ten principals of economic is a theoretical summary by Mankiw to give you an overview of three situations about economic:
1) How people make decisions
2) How economic works as a whole
3) How people Interacts
http://www.swlearning.com/econom ... s2e/principles.html
So in your question (I assume you do not need to apply all principals in your analysis), I use "how people make decisions"
People always face trade off, whenever you obtain you lose the opportunity: If you choose to build a hospital, the benefit of a school is the cost of hospital because you lose this opportunity, vice versa. Therefore without comparing the real building cost but opportunity cost, I will compare the benefit of hospital or school. In an island, a hospital hardly serves but the people of the island whereas a school cultivate young people, and these young people can improve "productivity" of the "whole country" ( not limited to the island).
Therefore building a school gives me more incentives, I choose to have this option.
Hope you get some ideas and improve yourself in the answer.
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雷达卡
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