Cost and Benefit Analysis

What does cost really mean?

• Cost tells us what kind of product or service we're getting

• Cost is the time it takes to make a product or provide a service

• Cost is what you pay so you can get something

• Cost is how much you love a product or service.

Which service would give you the biggest benefits?

• Buying a toy at least once a year.

• Taking a week off from school at least once a year.

• Seeing a live football game at least once a year.

• Going to the dentist at least once a year

How can you analyze or figure out the benefits of an activity?

• Ask yourself about all the bad things that came out of an activity you chose.

• Ask yourself about all the positive and good things that came out of an activity you chose.

• Don't even think about it.

• Ask others if they think you benefitted.

Why is it important to compare costs and benefits?

• To waste time and effort

• To ignore the potential risks that could get you in trouble.

• To make impulsive decisions whenever you want something.

• To make GOOD, informed decisions and to ask yourself if it is worthi it.

What is cost and benefit analysis?

• A systematic way to figure out costs and benefits to figure out if you gained more than something cost

• A way to find out the social and environmental impacts of a project.

• A way to tell the quality of a product or service.

• A way to calculate what you gained and what you lost

Give an example of a cost.

• Labor cost

• Maintenance cost

• Transportation cost

• Material cost

Give an example of a benefit.

• Improved cardiovascular health

• Enhanced cognitive function

• Increased muscle strength

• Reduced risk of cancer

How can you make decisions based on cost and benefit analysis?

• Evaluate the potential costs and benefits of each option and compare the net benefits to determine the option with the greatest overall value.

• Choose the option with the highest cost regardless of the benefits

• Choose the option with the lowest cost regardless of the benefits

• Evaluate the potential benefits only and ignore the costs

What factors should be considered when comparing costs and benefits?

• currency, location, color, size

• weather, population, language, culture

• time frame, magnitude, probability, discount rate

• age, gender, education, occupation

Explain the concept of opportunity cost.

• Opportunity cost is the value of the worst alternative that is chosen when making a decision.

• Opportunity cost is the value of the next best alternative that is considered when making a decision.

• Opportunity cost is the value of the next best alternative that is gained when making a decision.

• Opportunity cost is the value of the next best alternative that is forgone when making a decision.