Cost and Benefit Analysis

1.      We have learnt that CBA(Cost and Benefit Analysis) is not the only method to choose among different public policies. There is an alternative method that uses Pareto efficiency as a criterion for choosing among public policies. Let's call this method the "PE method". Is the following statement true or false? If a policy alternative is chosen according to CBA method, then it will still be the chosen alternative if we instead use PE method. Explain.

2.      Suppose there are 4 people in an economy: A, B, C and D. A is in love with B, likes C and hates D. B is in love with C, likes A and hates D. C is in love with D, likes A and does not like B. Finally, D is crazy for C, likes B and does not like A. Which of the following couplings is not Pareto efficient?Explain.

a)         A dates B, C dates D.

b)         A dates C, B dates D.

c)         A dates D, B dates C.