Cost-Benefit Analysis in Public Spending

To determine if the consequences of a project are Pareto-improving.

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.

The change is justified if the benefits outweigh the costs.

<p>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.</p> Signup and view all the answers

<p>Building a road is justified if it is efficient public spending, which means it meets the social objective of efficiency.</p> Signup and view all the answers