Cost Benefit Analysis: Evaluating Economic Decisions for Society

The video tutorial explains cost benefit analysis, a technique to evaluate social benefits and costs of economic decisions. It covers the importance of considering both private and external costs and benefits, using an example of building a new airport. Challenges in estimating externalities and the concept of discounting future values to present value are discussed. The tutorial concludes with an evaluation of the method's effectiveness and limitations.

What is the primary purpose of cost benefit analysis?

What factors should the government consider when evaluating a new infrastructure project?

Explain the difference between social costs and private costs.

How do external benefits contribute to social benefits?

Discuss the challenges of estimating external costs like noise pollution.

What is the significance of discounting future revenues in cost benefit analysis?

How is net present value calculated in the context of cost benefit analysis?

In what ways can cost benefit analysis be beneficial for governments or businesses?

What are some potential problems with conducting a cost benefit analysis?

Why might the interest rate used for discounting change over time?