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City and Regional Planning QUESTION #4988
Question 1
In cost-benefit analysis, if Benefit-Cost Ratio (BCR) is 0.85, the project should be:
  • Immediately approved
  • Rejected✔️
  • Modified and reanalyzed
  • Implemented with subsidies
Correct Answer Explanation
BCR = $\frac{\text{PV of Benefits}}{\text{PV of Costs}}$ < 1.0 indicates costs exceed benefits, making the project economically unviable from a welfare perspective. Projects should only proceed if BCR ≥ 1.0, meaning benefits justify costs.