Questions: When properly applying the cost-benefit principle, you must calculate the costs and benefits of a decision relative to: taking no action. the next best alternative. any alternatives you can think of. the worst alternative.

The answer is the second one: the next best alternative.

Explanation for each option:

• Taking no action: This option is incorrect because the cost-benefit principle typically involves comparing the decision to the next best alternative, not just inaction. Inaction might be considered in some cases, but it is not the standard approach.

• The next best alternative: This is the correct answer. The cost-benefit principle involves comparing the costs and benefits of a decision to the next best alternative. This helps in determining the opportunity cost and making the most efficient choice.

• Any alternatives you can think of: This option is incorrect because it is not practical or necessary to compare a decision to every conceivable alternative. The focus should be on the most relevant and feasible alternatives, particularly the next best one.

• The worst alternative: This option is incorrect because comparing a decision to the worst alternative does not provide meaningful insight into the opportunity cost or the efficiency of the decision. The goal is to make the best possible choice, not just a better choice than the worst option.

In summary, when applying the cost-benefit principle, you should compare the costs and benefits of a decision relative to the next best alternative.