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:

Bottleneck

A point of congestion or blockage in a system, process, or production line that significantly delays or prevents progress.

Fixity of Production

The characteristic of production processes where inputs and outputs are fixed in the short term, allowing little flexibility.

Average Costs

is the total costs divided by the quantity produced, used to determine the cost of producing one unit of goods or services.

Average Cost

The aggregate expense of manufacturing, when divided by the quantity of items made.