Which of the following scenarios provides an example of a cost benefit analysis?
Answer (2)
Cost-benefit analysis is a process used in business to evaluate the overall value or impact of an investment or decision by comparing the costs associated with the action and the benefits that will be gained.
Here are some scenarios that could exemplify cost-benefit analysis:
Launching a New Product: A company wants to introduce a new product. They conduct a cost-benefit analysis by estimating the production costs, marketing expenses, and distribution costs and then compare it to the estimated revenue from sales and the potential increase in market share. The analysis helps determine if the product launch is financially viable.
Infrastructure Investment: A city government is considering building a new bridge. They conduct a cost-benefit analysis by calculating the costs of construction, maintenance, and any potential tax increases against the benefits such as reduced traffic congestion, shorter commutes, and potential economic growth in the area.
Academic Decision-Making: A student deciding whether to pursue higher education performs a cost-benefit analysis by weighing the cost of tuition and potential student loans against the benefit of higher future earnings and improved career opportunities.
These examples illustrate how cost-benefit analysis involves carefully assessing and comparing the total costs and expected benefits of a project or decision.
Cost-benefit analysis evaluates decisions by comparing associated costs and expected benefits. Examples include launching a new product, infrastructure investments, and academic decision-making. These scenarios illustrate how this analysis aids in informed decision-making.
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