Full Answer
Which term refers to the benefits of the best alternative option that are given up by a particular decision?
Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice. The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up.
What type of analysis examines the costs and expected benefits of a choice?
A cost-benefit analysis (CBA) is the process used to measure the benefits of a decision or taking action minus the costs associated with taking that action. A CBA involves measurable financial metrics such as revenue earned or costs saved as a result of the decision to pursue a project.
What is given up when a decision is made?
Opportunity cost is what you give up (the benefits of the next best alternative) when you make a choice.
Which is a simple way of describing cost-benefit analysis?
Which is a simple way of describing cost-benefit analysis? Making a decision by listing pros and cons.
What is cost and benefits in economics?
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.
What is a cost effective decision?
In practice, cost-effectiveness analysis most often involves the comparison of two or more alternatives where one offers improved health but at increased cost; the goal is to determine whether the expected results of an intervention are “worth” the added costs.
What is the opportunity cost of a decision?
“Opportunity cost is the value of the next-best alternative when a decision is made; it's what is given up,” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.
What is the term opportunity cost?
Opportunity costs represent the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can be easily overlooked.
What is another word for opportunity cost?
Synonymsvalue.assessment.monetary value.average cost.marginal cost.incremental cost.expensiveness.price.More items...
What is an example of costs and benefits?
For example: Build a new product will cost 100,000 with expected sales of 100,000 per unit (unit price = 2). The sales of benefits therefore are 200,000. The simple calculation for CBA for this project is 200,000 monetary benefit minus 100,000 cost equals a net benefit of 100,000.
What is another word for cost-benefit analysis?
What is another word for cost-benefit analysis?benefit-cost analysisbenefit costs analysisrisk analysisrisk studyCBAweighing of the pros and consconsideration of the advantages and disadvantages
What is cost-benefit analysis psychology?
1. an analytic procedure that attempts to determine and compare the economic efficiency of different programs. Costs and benefits are reduced to their monetary value and expressed in a cost–benefit (or benefit–cost) ratio.