Economics · Public Finance
The methodological distinction between Cost-Benefit Analysis (CBA) and Cost-Effectiveness Analysis (CEA) primarily lies in which of the following?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1CBA focuses entirely on efficiency and optimal resource utilization, while CEA provides a comprehensive evaluation of economic feasibility and societal impact.
- 2CBA attempts to monetize both costs and benefits to determine a net benefit or ratio, whereas CEA compares the costs associated with achieving a specific, non-monetary outcome.✓
- 3CBA is primarily used in social services and healthcare where outcomes are hard to monetize, while CEA is strictly used in large infrastructure development projects.
- 4CBA only considers direct financial costs, whereas CEA encompasses broader social, private, and opportunity costs.
Correct answer
CBA attempts to monetize both costs and benefits to determine a net benefit or ratio, whereas CEA compares the costs associated with achieving a specific, non-monetary outcome.
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