A Proposal to Build a Dam on a Wild River

question 71

Multiple Choice

A proposal to build a dam on a wild river may look like a good idea from the cost/benefit study done by the Army Corps of Engineers, but an analysis done by the Sierra Club might suggest that the dam would be a complete waste of money. When different groups give us radically different cost/benefit results:

• A) we have an example of how cost/benefit analysis does not work as a way of forming policy.
• B) the studies may still be useful if we can see the underlying assumptions and estimates of each group.
• C) we should realize that sometimes it is best to trust in the political process rather than try to use an economic approach.
• D) we should conclude that the best way to decide who is telling the truth is to find which group has the best intentions.

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Definitions:

Income Redistribution

Economic policies or mechanisms designed to transfer income and wealth from certain individuals or groups to others to achieve social or economic objectives.

Total Utility

The total satisfaction or benefit received by consuming a certain amount of a good or service.

Female Poverty Rate

The percentage of females living below the poverty line in a given region.

Male Poverty Rate

The proportion of the male population living below the poverty line, measured by the income level considered necessary for basic living standards in a given country or area.