Cost-Benefit Analysis (CBA) (Grade 12 NSC Matric Economics): Flashcards
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Practise the cards
10 cards from this deck
Cost-benefit analysis definition
Cost-benefit analysis definition
Systematic approach comparing project costs vs expected benefits
Private sector CBA focus
Private sector CBA focus
Feasibility studies on own costs/benefits and profitability
Public sector CBA focus
Public sector CBA focus
Evaluates social costs and social benefits for whole society
Why use CBA when market signals fail?
Why use CBA when market signals fail?
CBA provides alternative way to assess resource allocation
Why CBA for free government services?
Why CBA for free government services?
No market price to indicate value, CBA shows if benefits justify costs
Private costs in CBA
Private costs in CBA
Costs directly experienced by the organisation undertaking project
External costs/benefits (externalities)
External costs/benefits (externalities)
Impacts felt by society broadly, not just the project operator
Gautrain private costs examples
Gautrain private costs examples
Land acquisition, building materials, transport, labour, overheads
Gautrain external benefits examples
Gautrain external benefits examples
Job creation, business opportunities, time savings, reduced accidents
Main challenge in CBA
Main challenge in CBA
Accurately measuring and valuing external impacts in monetary terms