In cost-benefit analysis,regulatory intervention can be justified if the

Question

Quizplus · Accepted Answer

Cost-benefit analysis seeks to determine whether the benefits of a regulation outweigh its costs. Therefore, regulatory intervention can be justified if the additional benefit derived from the intervention is greater than the incremental cost of the intervention, that is, the marginal benefit of regulation exceeds its marginal cost. Option B is incorrect because economic cost is not necessarily an indication of the value of improvements in regulatory intervention. Option C is incorrect because it assumes government failure, which is not necessarily applicable to all situations.

In Cost-Benefit Analysis,regulatory Intervention Can Be Justified If the