Why might individuals reach different decisions using cost-benefit analysis even when facing the same conditions?

• A. Because cost-benefit analysis ignores opportunity costs
• B. Because individuals are required to follow government regulations in their analysis
• C. Because cost-benefit analysis always produces identical results for everyone
• D. Because they may have different values and preferences, leading to different assessments of costs and benefits

Answer: (D)

Verified step by step guidance

1. Understand that cost-benefit analysis involves comparing the total expected costs against the total expected benefits of a decision or action.
2. Recognize that even when individuals face the same objective conditions, their subjective values and preferences can differ, influencing how they perceive and weigh costs and benefits.
3. Acknowledge that opportunity costs are an integral part of cost-benefit analysis, so ignoring them is not a reason for differing decisions.
4. Note that government regulations do not force individuals to make identical cost-benefit analyses; rather, they may set constraints or rules within which decisions are made.
5. Conclude that because people value outcomes differently, their assessments of what counts as a cost or a benefit vary, leading to different decisions despite identical external conditions.