Final answer:
A cost-benefit analysis of a public good is used to evaluate the economic feasibility by comparing the costs and benefits. It helps policymakers make informed decisions about the allocation and provision of the public good.
Step-by-step explanation:
A cost-benefit analysis is used to evaluate the economic feasibility of a public good. It seeks to assess the costs involved in producing and maintaining the public good and compare them to the benefits that will be derived from it. One key purpose of a cost-benefit analysis is to determine whether the benefits outweigh the costs, helping policymakers make informed decisions about the allocation and provision of the public good.
For example, by conducting a cost-benefit analysis, policymakers can assess the financial impact of building a new road or bridge, considering factors such as construction costs, maintenance costs, and the expected economic benefits in terms of reduced traffic congestion and increased economic activity.
Therefore, option A is incorrect because a cost-benefit analysis does not solely aim to determine how much consumers should pay for the good. Option B is also incorrect because it does not solely focus on deciding how much of the good the government should supply. Option C is incorrect because it does not primarily involve laying down rules about who will be allowed to consume the good. Option D is incorrect because a cost-benefit analysis does not specifically document why the private sector is not supplying the good. Option E is also incorrect because establishing whether the good is excludable is not the main purpose of a cost-benefit analysis.