Cost-Benefit Analysis in Public Spending
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Questions and Answers

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?

<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

What is the relationship between efficiency as a social objective and the decision to build a road?

<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

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