Explain various cost benefit study methods for single and multipurpose projects.
Answers
It provides superior criteria for project evaluation in planned economy. It helps the planning authority in making correct investment decisions to achieve optimum resource allocation by maximising the difference between present value of benefits and costs of a project.
Thus, cost benefit analysis “purports to describe and quantify the social advantages and disadvantages of a policy in terms of a common monetary unit.” The objective function can be expressed as Net Social Benefit (NSB)=Benefits—Costs, where benefits and costs are measured in terms of shadow or accounting prices of inputs and not of actual market prices.
2. Origin of Cost Benefit Analysis:
The origin of cost benefit analysis can be traced back to welfare economics of 19th century. The first practical embodiment of the maximization of net benefit occurred in 1930s in the realm of water resources. According to Flood Control Act of 1936, “The principle of comparing benefits to whomsoever they may accrue with the estimated costs.” This reveals unmistakably the social nature of the public investment decision.
The evaluation of federal expenditures in the field of navigation had been undertaken by the Corps of Engineers. The Green Book of 1950 produced by the Federal Inter-Agency River Basin Committee and the Bureau of Budget’s Budget Circular A-47 of 1952 made real attempt to instil order into the diverse and loosely defined cost-benefit criteria.
Brainly.in
What is your question?
Secondary SchoolComputer science 10 points
Explain various cost benefit study methods for single and multipurpose projects.
Ask for details Follow Report by Zahidmon35611 14 hours ago
Answers
TheEmma
TheEmma Ace
The role of cost benefit is explained by Prof. Marglin as, “The perspective and Five year Plans determine the broad strategy of growth by allocating resources among sectors. But the strategy of growth embodied in the Plans leaves many tactical questions unsolved, and it is these tactical decisions that are the province of cost benefit cost analysis.”
It provides superior criteria for project evaluation in planned economy. It helps the planning authority in making correct investment decisions to achieve optimum resource allocation by maximising the difference between present value of benefits and costs of a project.