Cost Benefit Analysis: (n.) E.J. Mishan defines traditional cost benefit analysis as allowing an economist to select projects and programs that are estimated to produce an excess of social benefit over resource cost, in the textbook Cost Benefit Analysis.
CBA has two purposes:
- To determine if it is a sound investment/decision (justification/feasibility)
- To provide a basis for comparing projects. It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much.
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