When Benefit-Cost Analysis Is Used to Facilitate U

question 26

Multiple Choice

When benefit-cost analysis is used to facilitate U.S. public policy decisions,

• A) the discount rate is selected by the individual policy maker
• B) no adjustment can be made for inflation, since the inflation rate is not known in advance
• C) the discount rate used should reflect the social opportunity cost of funds
• D) only incremental costs are adjusted for time differences

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Definitions:

Consumer Preference

Consumer preference refers to the subjective tastes and choices of individuals regarding different goods and services, influenced by factors such as price, quality, and personal tastes.

Indifference Curves

Graphical representations in economics that show different combinations of two goods that provide equal satisfaction and utility to a consumer.

Consumption Choice

The decision made by consumers on how to allocate their income among various goods and services to maximize their utility.

Marginal Utility

The extra pleasure or benefit gained by a consumer from using an additional unit of a product or service.