Question
The following table, in which all figures are in million dollars, summarizes the result of recent cost-benefit analyses of five government projects: Project Social Benefits
The following table, in which all figures are in million dollars, summarizes the result of recent cost-benefit analyses of five government projects:
Project | Social Benefits | Social Costs | Net Social Benefits | Benefit-Cost Ratio |
A | $110 | $130 | ||
B | 120 | 105 | ||
C | 260 | 130 | ||
D | 110 | 40 | ||
E | 210 | 110 |
a. Fill in the two right-hand columns of the table above. Compute the net gains (net social benefits) and the benefit-cost ratio for each project.
b. If the government wanted to maximize social welfare, which one of the projects listed above should be undertaken? Briefly explain.
c. What does the benefit-cost ratio indicate?
d. If the government
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