Suppose That Policymakers Are Doing Cost-Benefit Analysis on a Proposal

question 37

Multiple Choice

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?

• A)The benefits are usually easier to measure than the costs.
• B)Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs.
• C)Estimating the value of a human life is difficult but necessary to evaluate the proposal.
• D)Both a and b are correct.

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Definitions:

Economies of Scope

Cost advantages that a business achieves due to a variety of goods or services rather than specializing in a single product.

Multiproduct Cost Function

A Multiproduct Cost Function calculates the cost of producing different products within the same firm, taking into account the cost interactions between producing multiple products.

Economies of Scope

Cost advantages that a business experiences by producing a wider variety of products, as opposed to specializing in a single product or service.

Learning Curve

Graph relating amount of inputs needed by a firm to produce each unit of output to its cumulative output.