Benefit-cost analysis identifies the
A) allocatively efficient level of risk
B) the level of risk at which MSB and MSC of risk reduction are equal
C) both (a) and (b)
D) none of the above

Question

Quizplus · Accepted Answer

Benefit-cost analysis helps identify the allocatively efficient level of risk by comparing the costs and benefits of risk reduction. It also helps to determine the level of risk at which the MSB (marginal social benefit) and MSC (marginal social cost) of risk reduction are equal. Therefore, both (a) and (b) are correct.

Benefit-Cost Analysis Identifies the