Which term best describes a study that compares the costs and benefits to society of providing a public good?

• A. Marginal utility assessment
• B. Cost-benefit analysis
• C. Price discrimination
• D. Market equilibrium analysis

Answer: (B)

Verified step by step guidance

1. Understand the key terms involved: 'Marginal utility assessment' focuses on the additional satisfaction from consuming one more unit of a good, 'Price discrimination' refers to charging different prices to different consumers, and 'Market equilibrium analysis' studies the balance of supply and demand in a market.
2. Recognize that a public good is typically non-excludable and non-rivalrous, meaning it is available to all and one person's use does not reduce availability to others.
3. Identify that the problem asks for a study comparing costs and benefits to society, which involves evaluating both positive and negative effects of providing the public good.
4. Recall that 'Cost-benefit analysis' is the method used to systematically compare the total expected costs against the total expected benefits of a project or decision, especially in public economics.
5. Conclude that the term best describing such a study is 'Cost-benefit analysis' because it directly addresses the evaluation of societal costs and benefits.