5. What is the correct criterion in evaluating government programs?
A. The size of government: A larger government provides more goods.
B. The size of government: A smaller government has lower taxes.
C. By comparing the marginal benefit to the marginal cost of the government program. If the marginal benefit exceeds the marginal cost this is an efficient program.
D. By comparing the marginal benefit to the marginal cost of the government program. If the marginal cost exceeds the marginal benefit this is an efficient program.

Question

5.    What is the correct criterion in evaluating government programs?
A.    The size of government: A larger government provides more goods.
B.    The size of government: A smaller government has lower taxes.
C.    By comparing the marginal benefit to the marginal cost of the government program. If the marginal benefit exceeds the marginal cost this is an efficient program. 
D.    By comparing the marginal benefit to the marginal cost of the government program. If the marginal cost exceeds the marginal benefit this is an efficient program.

BlackTom AI · Accepted Answer

The question asks: What is the correct criterion in evaluating government programs?
Option A: 'The size of government: A larger government provides more goods.' This focuses on the size of government rather than on evaluation of a specific program’s value. Merely being larger or smaller does not determine efficiency; it ignores whether the benefits justify the costs.
Option B: 'The size of government: A smaller government has lower taxes.' While taxes relate to government size, this choice ties efficiency to tax levels rather than to the specific marginal benefits and costs of the program in question. It conflates fiscal burden with program value and misses the core efficiency test.
Option C: 'By comparing the marginal benefit to the marginal cost of the government program. If the marginal benefit exceeds the marginal cost this is an efficient program.' Here, the focus is directly on marginal analysis: when MB > MC, resources are allocated to maximize net benefits, implying efficiency for that program.
Option D: 'By comparing the marginal benefit to the marginal cost of the government program. If the marginal cost exceeds the marginal benefit this is an efficient program.' This reverses the correct logic. If MC > MB, the net benefit is negative, indicating inefficiency, not efficiency.
In sum, A and B mistake the basis for evaluating a program by general size or tax effects rather than the program’s own marginal cost-benefit balance, while D incorrectly defines efficiency by the opposite inequality. C correctly centers the standard marginal cost–benefit criterion used in evaluating public programs.

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