Question

Policy A has a higher-cost effectiveness ratio than policy B.

a. Under what circumstances (if any) would you recommend implementation of policy A? Explain.

b. Under what circumstances (if any) would you recommend implementation of policy B? Explain.

c. Under what circumstances (if any) would you recommend implementation of both policies? Explain.

d. Under what circumstances (if any) would you recommend implementation of neither policy? Explain.

Answer 1

Introduction:-

Any policy decision requires active, and careful analysis of all measures before which it is successfully implemented in the country respectively.

Any decision on macroeconomic policies usually involves, deciding on various aspects such as cost efficiency of a project, social impact, profits which it will bring for the government, capital investment etc.

It is to be remembered, that not all strategies can be implemented at any given period of time throughout and these require relative judgement to be applied before this is selected for any country or economy respectively.

Each economic stage in a country differs and so does policy selection. Each requires different things to be considered considering the resources, manpower availability and all other factors in mind respectively.

Case Specifics

(A) Under what circumstances (if any) would you recommend implementation of policy A? Explain.

In the case above, a key highlight of the policy A is that it has a higher cost effectiveness ratio thus being one of the main reasons for its implementation.

Provided that the companies resources are adequate enough, and the selection is not hazardous to the general public and capital requirements can relatively be tackled by the economy easily the decision can be chosen as the best alternative. It is also to be remembered that in some cases like medical healthcare etc. a county may go in for a relatively expensive policy decision which is not as cost efficient.

This selection is primarily used during manufacturing of products or when a country is relatively developing or underdeveloped respectively. Though, developed countries also have numerous examples of adopting cost efficient strategies the presence is more skewed in underdeveloped and developing ones respectively.

B) Under what circumstances (if any) would you recommend implementation of policy B? Explain.

When a policy decision is critical in nature or the entity offering a cost efficient way in policy A is relatively new in the industry or has a bad name, an economy may favor policy b in nature.

This also happens during production of high quality material which essentially requires higher capital overlays and countries can cope with overspending in these areas. Examples of this would be the airlines and defense sectors respectively.

(C) Under what circumstances (if any) would you recommend implementation of both policies? Explain.

When these policies are unrelated to one another, and the context of each one is such which will bring in gains for the country it is implemented in a country may choose to adopt both the policies respectively.

Consider a cost efficient way of bringing in more electricity into the economy by introducing hydroelectricity in the country which brings in long term gains for a society. And Policy B to spend on fossil fuels where electricity cannot reach through traditional means.

Under such special circumstances a country may choose to adopt both the policies respectively.

(D) Under what circumstances (if any) would you recommend implementation of neither policy? Explain.

When both these policies are harmful to the general public they may never be chosen at all. Sometimes policy decisions get scrapped, because the general public opposes the same, or even when these may be cost efficient or allow for good quality of products to be manufactured, yet they may not fall in line with the consumers and the general public at large.

This would require a decision to scrap such policy implementation altogether.

For example decisions involving environmental hazards are a prime example of the same in which policy (A) and (B) both maybe rejected basis the local requirements respectively.

Please feel free to ask your doubts in the comments section.