For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?
A)It conducts public surveys to determine if consumers want the product.
B)It checks to see what current spending can be eliminated, and how much of the public good can be supplied from the spending cut.
C)It takes a vote in Congress.
D)It evaluates the costs and benefits of producing the good.

Question

Quizplus · Accepted Answer

The government is likely to use a cost-benefit analysis to determine the quantity of a public good that should be supplied. This involves evaluating the costs and benefits of producing the good to determine if it is worth the investment. Cost-benefit analysis takes into account both the monetary and non-monetary costs and benefits of the public good. By comparing the costs and benefits, the government can determine the optimal quantity of the good to produce.

For Certain Public Projects Such as Building a Dam on a River