How Does Decision Making Under Profit-Maximization Compare with Benefit-Cost Analysis

question 6

Multiple Choice

How does decision making under profit-maximization compare with benefit-cost analysis?

• A)Benefit-cost analysis is more comprehensive than profit-maximization since it includes the value of consumer surplus.
• B)Even in the presence of externalities,profit-maximization leads to efficient outcomes,while benefit-cost analysis does not.
• C)Profit maximization internalizes the cost of externalities unlike benefit-cost analysis.
• D)A public program should be implemented on the basis of profit-maximization principles and not benefit-cost analysis.
• E)With profit-maximization the benefits and costs from a program are usually overstated.

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