Cost-Benefit Principle

On what basis do you make economic decisions? One potential approach is to employ the cost-benefit principle, which suggests engaging only in those actions that create an economic surplus. Considering other criteria such as opportunity costs helps you to make a rational choice. For example, when budget crises occur, local or national governments may opt to cut back on critical programs, while many others may consider raising taxes.

Post by Day 3 a 250- to 300-word statement that addresses the following:

  • What are the opportunity costs of reducing expenditures (such as on education and social services programs), compared to the option of raising taxes? Why?
  • Explain what you think are the rational choices in such a situation, and what other options should be considered and why.

Read a selection of your colleagues’ postings.

Respond by Day 6 to two or more of your colleagues’ postings in one or more of the following ways:

  • Ask a probing question.
  • Share an insight from having read your colleague’s posting.
  • Offer and support an opinion.
  • Make a suggestion.
  • Expand on your colleague’s posting.

Return to this Discussion in a few days to read the responses to your initial posting. Note what you learned and the insights you gained as a result of the comments your colleagues made.

Be sure to support your work with specific citations from the Learning Resources and any additional sources.

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