When a government conducts a cost-benefit analysis, it must consider:

• A. only positive analysis, ignoring any value judgments
• B. both positive analysis (what is) and normative analysis (what ought to be)
• C. neither positive nor normative analysis
• D. only normative analysis, disregarding factual outcomes

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the difference between positive and normative analysis. Positive analysis deals with objective, fact-based statements about 'what is,' while normative analysis involves subjective value judgments about 'what ought to be.'
2. Step 2: Recognize that a cost-benefit analysis involves evaluating the actual costs and benefits (positive analysis) and also making decisions based on values or goals (normative analysis).
3. Step 3: Identify that ignoring either positive or normative analysis would lead to an incomplete evaluation because cost-benefit analysis requires both factual assessment and value-based decision-making.
4. Step 4: Conclude that the government must consider both positive analysis (to understand the factual impacts) and normative analysis (to decide what policies should be implemented based on those impacts).
5. Step 5: Therefore, the correct approach in cost-benefit analysis is to incorporate both positive and normative analysis.