What describes using cost benefit analysis?

Answer 1

The purposes of doing a cost-benefit analysis are to determine if it is a sound investment or decision and to provide a basis for comparing projects.

Answer 2

Cost--benefit analysis is often used by governments and others, e.g. businesses, to evaluate the desirability of a given policy. It is an analysis of the expected balance of benefits and costs, including an account of foregone alternatives and the status quo, helping predict whether the benefits of a policy outweigh its costs, and by how much (i.e. one can rank alternate policies in terms of the ratio of costs and benefit. Altering the status quo by choosing the lowest cost-benefit ratio can improve pareto efficiency, which no alternative policy can improve one group's situation without damaging another. Generally, accurate cost-benefit analysis identifies choices that increase welfare from a utilitarian perspective. Otherwise, cost-benefit analysis offers no guarantees of increased economic efficiency or increases of social welfare; generally positive microeconomic theory is moot when it comes to evaluating the impact on social welfare of a policy

Answer 3

Cost -benefit is a way of comparing alternatives based on how much each will cost relative to the benefit to be derived. Many times it is done on a strictly numerical basis,

e.g. alternative A will cost x amount and generate y revenue, alternative B will cost p and generate q revenue, which one should we choose?

but sometimes it is more subjective ,

e.g. alternative C will require we take these risks but could yield these benefits, so is the reward worth the risk?

Sometimes we do this kind of analysis without thinking about what it is called

- should I ask the pretty girl out? If I do I might get a date with her and have fun, but if she turns me down it might be embarrassing - is the risk worth the reward?

- should we go for it on fourth down - if we succeed we keep the drive alive, but if we fail, we turn the ball over with good field position and maybe pass up a chance for kicking a field goal.

Answer 4

A cost benefit analysis balances cost of the action against the benefits one expects from it.

Answer 5

A process of maximizing benefits and minimizing costs.

A process of maximizing benefits and minimizing costs.