Performing Cost/benefit Analysis Involves

question 17

Multiple Choice

Performing cost/benefit analysis involves:

• A) quantifying the costs and benefits associated with a given activity and deeming the activity worthwhile only if the costs exceed the benefits.
• B) quantifying the costs and benefits associated with a given activity and deeming the activity worthwhile only if the benefits exceed the costs.
• C) only those activities that provide an explicit monetary loss and gain.
• D) only those activities that provide an implicit monetary loss and gain.

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Definitions:

Positive Externality

A benefit enjoyed by a third-party as a result of an economic transaction they are not directly involved in.

Equilibrium Quantity

The amount of products or services available that matches the amount sought after at the price where supply meets demand.

Socially Optimal

A condition in which resources are allocated in the most efficient way from the perspective of society as a whole.

Positive Externality

A beneficial effect experienced by a third-party or the society at large, as a result of an economic activity, that isn't reflected in the cost.