Consider four possible benefits of a water resources project:
I.Provides employment to construction workers currently building houses.
II.Provides electric power to the market.
III.Provides reduced flood risk to individuals living along the river.
IV.Raises the profits of MacDonald's stands in the area that serve construction workers.
According to the opportunity cost notion of cost-benefit analysis,which of these are true benefits?

Question

Quizplus · Accepted Answer

Opportunity cost in cost-benefit analysis considers the value of the next best alternative foregone. Providing electric power (II) and reducing flood risk (III) are direct benefits of the project. Employment (I) is not a true benefit if workers could be employed elsewhere, and increased profits for MacDonald's (IV) are indirect and not a direct benefit of the project itself.

Consider Four Possible Benefits of a Water Resources Project