Suppose the government plans to build a dam at one of several locations in the country.The government should build the dam in the location where:

Question

Quizplus · Accepted Answer

The government should build the dam where the net benefit is the highest. This means that the benefits of building the dam outweigh the costs, including any external costs that are not accounted for in the market. It is important to consider both the costs and benefits because choosing a location based only on revenue generation or low cost can lead to negative consequences for society as a whole. Additionally, building a dam where the marginal benefit just covers the marginal internal cost would not provide a net benefit, and would be inefficient.

Suppose the Government Plans to Build a Dam at One