Which of the following statements concerning cost-benefit analysis is true?
A)Large potential benefits,regardless of their time horizon,always justify government intervention.
B)Large potential costs,regardless of their time horizon,always preclude government intervention.
C)Though benefits from a government policy can be accurately measured,costs are usually impossible to quantify.
D)Cost-benefit analysis can be used effectively by private firms but should not be used in the public sector.
E)Though it is often difficult to estimate costs and benefits with precision,cost-benefit analysis can be useful in determining whether to implement a given government policy.

Question

Quizplus · Accepted Answer

While it may be difficult to precisely quantify the costs and benefits of a government policy, cost-benefit analysis can still be a useful tool in evaluating whether the benefits of implementing a policy outweigh the costs. It is not true that large potential benefits always justify government intervention or that large potential costs always preclude it. Additionally, while private firms may use cost-benefit analysis, it can also be used effectively in the public sector.

Which of the Following Statements Concerning Cost-Benefit Analysis Is True