Asked by MARIO MURILLO on May 04, 2024
Verified
In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.
Cost-Benefits Analysts
Professionals who evaluate the economic advantages and disadvantages of a decision by comparing the costs of an action to its benefits.
Price Signals
Price signals are indicators arising from the fluctuation in the price of goods or services, which reflect supply and demand dynamics and guide economic decisions.
Public Goods
Goods that are non-excludable and non-rivalrous, meaning they can be used by everyone and one person's use does not diminish another's.
- Understand the limitations of cost-benefit analysis in determining the provision of public goods.
Verified Answer
CM
carmen moralesMay 10, 2024
Final Answer :
False
Explanation :
For public goods, price signals are not readily available as they are for private goods because public goods are non-excludable and non-rivalrous, making it difficult to determine individual willingness to pay through market prices. Cost-benefit analysts often have to use alternative methods, such as surveys or models, to estimate the social value and optimal provision level of public goods.
Learning Objectives
- Understand the limitations of cost-benefit analysis in determining the provision of public goods.