Cost-Benefit Analysis Is Important in Determining the Role of Government

question 112

Multiple Choice

Cost-benefit analysis is important in determining the role of government in our economy because:

• A)the government should provide all goods in which benefits exceed costs
• B)cost-benefit analysis identifies the possible gains to society from government provision of a particular good
• C)markets for private goods are not able to effectively assign costs and benefits
• D)cost-benefit analysis identifies market failure

---

Definitions:

Economic Decisions

Choices made by individuals, businesses, and governments regarding resource allocation, production, and consumption, influenced by economic conditions and objectives.

Payroll Tax

Financial demands on employers and employees, typically derived as a percentage of the remunerations paid to staff.

Labor Supply

The total hours that workers are willing to work at a given wage rate, influenced by various factors like salaries, working conditions, and demographics.

Excess Burden

Excess burden is the economic loss society incurs as a result of tax inefficiencies, beyond the tax itself, often due to distorted economic behaviors.