5 Questions
What is the primary objective of cost-benefit analysis in evaluating government projects?
To determine if the consequences of a project are Pareto-improving.
Why might individuals be unwilling to build a free access road, and how can this issue be addressed?
Individuals may be unwilling to build a free access road due to the high cost. The government can address this issue by levying taxes to build the road.
What is the cost-benefit criterion for determining the justification of a project?
The change is justified if the benefits outweigh the costs.
What is the role of government in providing public goods like roads, and how is this decision made?
The government provides public goods like roads, and the decision to build is made by applying cost-benefit analysis to determine if the project is justified as efficient public spending.
What is the relationship between efficiency as a social objective and the decision to build a road?
Building a road is justified if it is efficient public spending, which means it meets the social objective of efficiency.
This quiz assesses understanding of cost-benefit analysis in government decision-making, particularly in determining if public spending is justified. Apply cost-benefit analysis to evaluate the efficiency of building a free access road.
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