Cost-benefit analysis requires ________.
A) choosing the alternative with the least net benefit
B) that all costs and benefits be measured in the same unit
C) evaluating the budget constraint before making a choice
D) that the risks associated with different alternatives be ignored

Question

Quizplus · Accepted Answer

Cost-benefit analysis requires that all costs and benefits be measured in the same unit in order to make an accurate comparison between alternatives. This is necessary to determine the net benefit of each alternative and ultimately make an informed decision. Choosing the alternative with the least net benefit (A) is not necessarily the goal of cost-benefit analysis, as the objective is to choose the alternative with the highest net benefit. Evaluating the budget constraint (C) may be a relevant consideration, but it is not a requirement of cost-benefit analysis. Ignoring risks associated with different alternatives (D) would be a serious oversight in the analysis, and is not a requirement nor desirable in cost-benefit analysis.

Cost-Benefit Analysis Requires ________