Cost-Bene t Analysis
Cost-Benefit Analysis
131 Undergraduate Public Economics Emmanuel Saez UC Berkeley
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OUTLINE Chapter 8 8.1 Measuring the Costs of Public Projects 8.2 Measuring the Benefits of Public Projects 8.3 Putting It All Together 8.4 Conclusion
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DEFINITION Cost-benefit analysis The comparison of costs and benefits of public goods projects to decide if they should be undertaken.
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8 . 1
Measuring the Costs of Public Projects
The Example
Chapter 8 Cost-Benefit Analysis
? 2007 Worth Publishers Public Finance and Public Policy, 2/e, Jonathan Gruber
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MEASURING CURRENT COSTS Cash-flow accounting: Accounting method that calculates costs solely by adding up what the government pays for inputs to a project, and calculates benefits solely by adding up income or government revenues generated by the project. Opportunity cost: The social marginal cost of any resource is the value of that resource in its next best use.
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