Which of the following statements is true of cost-benefit analysis?
(i) the best way to ascertain the value people put on a good is to ask them
(ii) the analysis should take into account only explicit costs and benefits
(iii) cost-benefit analyses often attempt to value goods for which there are a wide range of social impacts
A)(i)
B)(ii) and (iii)
C)(iii)
D)(i), (ii) and (iii)

Question

Quizplus · Accepted Answer

Statement (i) is not necessarily true as people may not accurately express the value they place on a good. Statement (ii) is false as the analysis should take into account both explicit and implicit costs and benefits. Statement (iii) is true as cost-benefit analysis often involves valuing goods for which there are social impacts beyond the immediate parties involved. Therefore, only statement (iii) is true.

Which of the Following Statements Is True of Cost-Benefit Analysis