Solution-Example on benefit-cost analysis

Example on benefit-cost analysis

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Reference no: EM13122275

1. Pareto improvement

a) Explain the following concepts, illustrating your answer with diagrams where appropriate:

(i) an actual Pareto improvement;
(ii) a potential Pareto improvement;
(iii) the Kaldor-Hicks criterion.

b) Which of these concepts can be used to formulate a practical choice criterion in benefit-cost analysis and why may it be difficult to use one or more of the others in this way.

Question 2: Choice criterion

a) Using a hypothetical example explain the following concepts:

(i) net present value;

(ii) benefit-cost ratio.

b) Explain where and why the use of these is appropriate.

Reference no: EM13122275

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Example on benefit-cost analysis

Reference no: EM13122275

Reference no: EM13122275

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