cost benefit analysis

Question 1

what is CBA

Answer 1

The cost-benefit analyst sums the
potential rewards expected from a situation or action and
then subtracts the total costs associated with taking that
action.
- A cost-benefit analysis can include both tangible and
intangible benefits and cost. Intangible costs and benefits
might include employees morale and customer
satisfaction.

Question 2

economists consider (In cba)

Answer 2

• all costs and benefits
• short/long term costs and benefits

Question 3

Marginal thinking

Answer 3

Marginal thinking compares the marginal benefit and
marginal cost of the next decision (marginal meaning small
change).

Question 4

sunk cost?

Answer 4

A sunk cost is money that has already been spent and cannot be recovered. Sunk costs are
excluded from future business decisions because they will remain the same regardless of the
outcome of a decision.

Question 5

Sunk cost fallacy

Answer 5

A psychological barrier that ties people to unsuccessful endeavours simply
because they’ve committed resources to it.