The Criticism That Benefit-Cost Analysis Does Not Reflect Distributional or Equity

question 30

Multiple Choice

The criticism that benefit-cost analysis does not reflect distributional or equity considerations:

• A) implies that the analysis is of little value when benefits are inequitably distributed.
• B) is not valid because benefit-cost analysis focuses on equity, not efficiency.
• C) is addressed by using the tax and redistribution systems to address economic inequities.
• D) holds that equity is more important than efficiency in a market economy.
• E) implies that benefit-cost analysis should be guardedly used to analyze public programs.

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Definitions:

Tax Rate

The rate at which taxes are imposed on the income of a person or business.

Expected Growth Approach

A method for estimating a company's future growth by analyzing historical data, trends, and external market factors.

Weighted Average Cost

A calculation that assigns weights to different costs or inputs, based on their relative importance or proportion.

Book Value

The net value of a company's assets minus its liabilities, essentially what shareholders would theoretically receive if a company was liquidated.