What Is Difficult About Estimating the Level of a Public

question 7

Multiple Choice

What is difficult about estimating the level of a public good that will maximize social welfare using cost-benefit analysis?

• A)The government cannot use cost-benefit analysis to estimate this.
• B)It is difficult for the government to use because it is hard to estimate the marginal costs of supplying a public good.
• C)It is difficult for the government to use because it is hard to estimate the marginal social benefits of supplying a public good.
• D)The costs of using it may make the provision of the public good prohibitive.