#1
Which of the following is a key step in conducting a Cost-Benefit Analysis?
Identifying and valuing all costs and benefits
ExplanationKey step involves identifying and quantifying all relevant costs and benefits.
#2
What does the term 'opportunity cost' mean in the context of Cost-Benefit Analysis?
The cost of missed opportunities due to a decision
ExplanationOpportunity cost refers to the value of the next best alternative foregone.
#3
In Cost-Benefit Analysis (CBA), what does the term 'discount rate' refer to?
The interest rate used to convert future costs and benefits to present value
ExplanationDiscount rate is the interest rate applied to future values to determine their worth in present terms.
#4
Which of the following is a limitation of Cost-Benefit Analysis?
It may not capture the distributional impact on different groups
ExplanationCBA may not account for how costs and benefits are distributed among different groups.
#5
What is the primary objective of conducting a Cost-Benefit Analysis in public policy?
To evaluate whether the benefits outweigh the costs
ExplanationPrimary objective is to assess if benefits exceed costs.
#6
Which of the following is a social benefit in Cost-Benefit Analysis?
Reduced air pollution leading to improved public health
ExplanationSocial benefits include improvements to society's well-being.
#7
What is the role of stakeholders in the context of Cost-Benefit Analysis?
They are individuals or groups affected by the decision and may have an interest in the outcome
ExplanationStakeholders are those with a vested interest in the decision's outcome.
#8
What is the Net Present Value (NPV) in the context of Cost-Benefit Analysis?
The present value of benefits minus the present value of costs
ExplanationNPV is the difference between the present value of benefits and costs.
#9
Which of the following is an example of an intangible cost in Cost-Benefit Analysis?
Environmental degradation
ExplanationIntangible costs include factors not easily quantified, such as environmental harm.
#10
What role does sensitivity analysis play in Cost-Benefit Analysis?
It explores the impact of changes in key assumptions on the results
ExplanationSensitivity analysis examines how variations in assumptions affect outcomes.
#11
What is the social discount rate in Cost-Benefit Analysis?
A rate used to discount the future benefits to their present value
ExplanationSocial discount rate discounts future benefits to their present value.
#12
In Cost-Benefit Analysis, what does the term 'shadow pricing' refer to?
Assigning a monetary value to intangible costs and benefits
ExplanationShadow pricing assigns monetary values to non-market goods and services.