Public sector investment projects are economically justifiable only when:
A) the discounted social benefits exceed the discounted social costs
B) the internal rate of return exceeds the social discount rate
C) the benefit-cost ratio exceeds zero
D) a and b only
E) a,b,and c

Question

Quizplus · Accepted Answer

Public sector investment projects are considered economically justifiable when the discounted social benefits exceed the discounted social costs (A) and when the internal rate of return exceeds the social discount rate (B). Option C is incorrect because the benefit-cost ratio needs to exceed one, not zero, to indicate that benefits outweigh costs.

Public Sector Investment Projects Are Economically Justifiable Only When