Suppose a new government policy will generate $5,000 of benefits for local businesses and $3,000 of costs. This policy can best be described as
A) Pareto efficient.
B) inefficient.
C) potentially efficient.
D) equitable.

Question

Quizplus · Accepted Answer

The policy is potentially efficient because the total benefits ($5,000) exceed the total costs ($3,000), suggesting that those who benefit could theoretically compensate those who bear the costs and still be better off, fitting the concept of potential Pareto efficiency.

Suppose a New Government Policy Will Generate $5,000 of Benefits