20 Questions
What is the main purpose of Social Cost Benefit Analysis (SCBA)?
To assess the intangible costs and benefits of a contemplated course of action
How does SCBA differ from financial analysis?
SCBA focuses only on tangible benefits and costs
Why has SCBA become important for private investment projects?
Because they have to be approved by different government agencies
What does SCBA evaluate in general?
All major intangible costs and benefits arising from a contemplated course of action
When did SCBA start to gain importance in evaluating public projects?
In late 1960s and early 1970s
What is the main limitation of financial cost-benefit analysis mentioned in the text?
It does not account for public goods and externalities.
What characterizes public goods, as described in the text?
They are non-excludable and non-rival in consumption.
What is an externality, as explained in the text?
An effect of one party's production/consumption activity on another party without any payment for the effect.
What is the equilibrium condition for a private decisionmaker, as mentioned in the text?
Marginal Private Cost (MPC) equals Marginal Private Benefit (MPB).
What is the difference between private and social benefits and costs, according to the text?
Social benefits and costs consider externalities, while private benefits and costs do not.
What are the key differences between Social Cost Benefit Analysis and financial analysis?
SCBA evaluates all major intangible costs and benefits arising from a contemplated course of action, while financial analysis takes into account only those costs and benefits falling on the decision maker and focuses only on tangible benefits or costs.
Why is Social Cost Benefit Analysis (SCBA) gaining importance in private investment projects?
SCBA is gaining importance in private investment projects as they have to be approved by different government agencies.
What is the primary purpose of Social Cost Benefit Analysis (SCBA)?
The primary purpose of SCBA is to evaluate all major intangible costs and benefits arising from a contemplated course of action.
How does Social Cost Benefit Analysis (SCBA) differ from financial cost-benefit analysis in terms of the costs and benefits evaluated?
SCBA evaluates all major intangible costs and benefits, while financial analysis takes into account only those costs and benefits falling on the decision maker and focuses only on tangible benefits or costs.
In what way does Social Cost Benefit Analysis (SCBA) serve as a social decision-making machinery?
SCBA serves as a social decision-making machinery by evaluating all major intangible costs and benefits arising from a contemplated course of action.
What are public goods, as described in the text?
Goods that are non-excludable and non-rival in consumption, leading to the free rider problem.
What is the equilibrium condition for a private decisionmaker, as mentioned in the text?
Marginal Private Cost (MPC) equals Marginal Private Benefit (MPB).
What are negative externalities, as explained in the text?
Harmful external effects of a project, such as pollution from local automobiles or noise pollution.
What is the major source of differences between financial and social cost-benefit analysis?
Market failure, which causes the market price to be an inadequate indicator of economic benefits and costs from the society's viewpoint.
How does Social Cost Benefit Analysis (SCBA) deviate from financial (private) cost and benefit analysis, according to the text?
SCBA does not include or reflect the social benefits and costs of a project, which are not accounted for in financial analysis.
Test your knowledge of Social Cost Benefit Analysis (SCBA), a tool developed for evaluating projects from the society's point of view, mainly used to evaluate public projects and gaining importance in private investment projects as well.
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