ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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CBA is an analytical framework used to measure the benefits and costs of a policy design
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Basically, CBA is a ‘ordinary’ rational decision-making process
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CBA focuses on economical efficiency
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CBA requires a medium-term view and involves immediate benefits and costs
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Detailed explanation-1: -What Is A Cost-Benefit Analysis? A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective.
Detailed explanation-2: -For very large projects with a long-term time horizon, a cost-benefit analysis might fail to account for important financial concerns such as inflation, interest rates, varying cash flows, and the present value of money.
Detailed explanation-3: -Which of the following is true of cost-benefit analysis? It conveys that the benefits from a project should exceed its costs.
Detailed explanation-4: -Which of the following is a disadvantage of cost-benefit analysis: It does not consider the time value of money.