Sign Up

Have an account? Sign In Now

Sign In

Forgot Password?

Don't have account, Sign Up Here

Forgot Password

Lost your password? Please enter your email address. You will receive a link and will create a new password via email.

Have an account? Sign In Now

Please type your username.

Please type your E-Mail.

Please choose the appropriate section so the question can be searched easily.

Please choose suitable Keywords Ex: question, poll.

Please choose an appropriate title for the question so it can be answered easily.

Sign InSign Up

IGNOU Answers

IGNOU Answers Logo IGNOU Answers Logo
Search
Ask A Question

Mobile menu

Close
Ask a Question
  • Home
  • Categories
    • All Questions
    • Commerce
    • Computer Science
    • Economics
    • English
    • General Queries
    • Political Science
    • Public Administration
    • Psychology
    • Sociology
    • Others
  • Tags
  • Users
  • Contact Us
Home/ Questions/Q 6664
Answered
Arifa. T
  • 0
Arifa. T
Asked: March 17, 20222022-03-17T20:00:34+05:30 2022-03-17T20:00:34+05:30In: Economics

Explain the meaning of Cost-Benefit analysis. Describe briefly the usual steps taken in a typical cost benefit exercise

  • 0
Explain the meaning of Cost-Benefit analysis. Describe briefly the usual steps taken in a typical cost benefit exercise
question
  • 1 1 Answer
  • 0 Followers
  • 0
  • Share
    Share
    • Share on Facebook
    • Share on Twitter
    • Share on LinkedIn
    • Share on WhatsApp

1 Answer

  • Voted
  • Oldest
  • Recent
  1. Best Answer
    admin
    2022-03-23T13:06:33+05:30Added an answer on March 23, 2022 at 1:06 pm

    Cost Benefit Analysis (CBA) as the name suggests, is a techniques in which we analyse the costs involved and benefit expected in any given project, decision, policy etc. If benefits exceed the costs, accept it as it is efficient. If it is other way round, reject it. CBA can be used to measure not only monetary costs and benefits but the element of non-monetary cost and non-monetary benefits can also be incorporated.

    Somewhere, profits are the one most important criterion to accept or reject a project. Profits are the difference between costs and benefits. But an important point to be noted is that costs are to be incurred in the present but benefits will flow only in the future. However, some costs may also be involved for the future. Therefore we need to calculate Net Present Value (NPV) of the benefits expected. Even NPV of various possible projects have to be compared to choose the best available option.

    Discounting The Future
    When we do cost-benefit analysis, the costs involved may have to be incurred in the present or future. Similarly the expected benefits also take place in the future. This gives rise to the problem of an appropriate discounting factor that gives us the accurate present value of the future costs and benefits. NPV can give us the net present value of future benefits but social rate of discount is different from market rate of discount. When there is involvement of government and existence of taxes, the rate that is applicable is:

    ΔS(1 +r) + { ΔC(1+r) /(1—t)}— ΔS — ΔC/ ΔS + ΔC.
    Where r is rate of interest;
    T is rate of tax;
    S is savings
    C is consumption.

    There are other problems also in estimating social discount rate:

    (a) Returns for future period are not known for certain.

    (b) Some costs can be known only once the project is over. For example, cost of cultural erosion.

    (c) Some social benefits are also conceivable only on the completion of the project. For example, creating awareness for any disease.

    Sometimes, when individuals themselves do not invest in education or health, as they may not be sure of the benefits, it is advisable that the government should provide for subsidized education or free health care to avail of the benefits that the whole society will get from this investment.

    Distributional Concerns

    While doing cost benefit analysis of any project, we must also consider the impact of the project on distribution of income. Whether it will benefit well off section more leading to increase in inequalities of income; or the poorer section and thereby reducing inequalities of income; or the benefits are being shared equally. According to Alfred Pareto, if any project makes someone better off without making anyone else worse off it should be accepted. But if poor section remaining at the same level and richer section is better off by a project, inequalities of income will increase. It will have welfare implications for the project. For example, the recently launched Reliance Metro in Delhi, might not have worsened the poor section and have better off the well off section but the same funds had an opportunity cost. Marginal utility is more for the poor than rich. Utilitarian approach suggests that the project which brings maximum good to maximum people is most efficient. Any project which makes poor section worse off has imposed a social costing terms of class struggle and increased crime rate. According to Rawlsian perspective, a project is worth if it benefits the poorest of the poor section of the society. Hence, both utilitarian perspective and Rawlsian approach strongly recommends that the transfer of resources from the luxuries of the rich to the basic needs of the poor will maximize the gains of the society.

    • 0
    • Reply
    • Share
      Share
      • Share on Facebook
      • Share on Twitter
      • Share on LinkedIn
      • Share on WhatsApp
Leave an answer

Leave an answer
Cancel reply

Browse

Sidebar

Ask A Question

Stats

  • Questions 339
  • Answers 340

Related Questions

  • A monopolist faces a demand function p = 15-(1/5)q, where ...

  • Discuss the Harris-Todaro model of migration. What has been the ...

  • Please someone give me solutions of baech 1st year

  • Explain the concept of short run and long run associated ...

  • ECONOMICS. I need BECC-102 Solution

  • Popular
  • Answers
  • Anonymous

    I need MCS-014 Assignment solution. ...

    • 14 Answers
  • himanshu

    i want answers of assignment ...

    • 11 Answers
  • Anonymous

    Can anyone provide answers of ...

    • 8 Answers
  • Anonymous

    What does the IGNOU BCA ...

    • 7 Answers
  • Vandana

    Calculate the physical address ...

    • 6 Answers
  • admin
    admin added an answer Evaluating a curriculum is an important process that helps determine the effectiveness of the curriculum and identify areas that need improvement. Here is a plan for how I would carry… January 27, 2023 at 2:41 pm
  • admin
    admin added an answer International Commission on Education for the Twenty-First Century Learning was headed by Jaques Delors, the former French Minister of Economy and Finance. The commission aimed at formulating suggestions and recommendations… January 27, 2023 at 2:29 pm
  • admin
    admin added an answer Education of an individual is defined as a process that results into total or overall development of an individual. Psychologists have identified three domains of a human being: Cognitive domain,… January 27, 2023 at 2:01 pm
  • admin
    admin added an answer Here is an example shell script that determines whether a given file exists in the home directory or not: #!/bin/bash # Check if the given file exists in the home… December 12, 2022 at 9:54 pm
  • admin
    admin added an answer There are many different search algorithms, and each one has its own complexities depending on the specific implementation and the type of data being searched. Here are some common search… December 12, 2022 at 9:47 pm

Top Members

admin

admin

  • 2 Questions
  • 1k Points
Pooja Sharma

Pooja Sharma

  • 7 Questions
  • 39 Points
Roushani Kumari

Roushani Kumari

  • 1 Question
  • 34 Points

Trending Tags

Free Assignments Free Solved Assignments IGNOU BCA Solved Assignments IGNOU BCOM Solved Assignments

Explore

  • Home
  • Categories
    • All Questions
    • Commerce
    • Computer Science
    • Economics
    • English
    • General Queries
    • Political Science
    • Public Administration
    • Psychology
    • Sociology
    • Others
  • Tags
  • Users
  • Contact Us

Footer

IGNOU Answers

About

IGNOU Answers is a social Questions & Answers platform which will help you to find answers to your questions..

Question Tags

BA Sociology ESO-11 Export Procedures and Documentation fst-01 International Business Finance ma english ma psychology mpc-004 question The Study of Society

Categories

  • Commerce
  • Computer Science
  • Economics
  • English
  • General Queries
  • Others
  • Political Science
  • Psychology
  • Public Administration
  • Science
  • Sociology

Useful Links

  • Home
  • Contact Us
  • Privacy Policy
  • Buy Assignments
  • IGNOU Updates

© 2021 IgnouAnswers.com. All Rights Reserved
Created With Love by KHOJINET.

Insert/edit link

Enter the destination URL

Or link to existing content

    No search term specified. Showing recent items. Search or use up and down arrow keys to select an item.