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cost-benefit analysis

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Microeconomics help is given in terms of cost-benefit analysis notes.

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Explain how cost-benefit analysis can be use to determine the proper levels of government spending. b. Give an expample of an instance where cost-benefit analysis could be used.

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a. Explain how cost-benefit analysis can be use to determine the proper levels of government spending.
The role of cost benefit is explained by Prof. Marglin as, "the perspective and dive year plans determine the broad strategy of growth by allocating resources among sectors. But the strategy of growth embodied in the plans leaves many tactical questions unsolved, and it is these tactical decisions that are the province of benefit cost analysis."
The benefit of a government project to a particular person is the amount that the person would be willing to pay to have the project undertaken. The cost is the amount that the person would require as compensation for the damages, losses, or other costs that the project imposes on that person.
Let us consider, for example, a project that consists of a dam on a river and a system of irrigation canals that provide flood control and irrigation to downstream property owners. Peter Bruno owns farm land downstream ...

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