Soical Cost Benefits Analysis ! Batra Computer Centre

Ph. No.: 8222066670, 4000670 Website: www.batracomputercentre.com

BATRA COMPUTER CENTREISO Certified 9001:2008


Social cost-benefits analysis of anything is associate with it social impact

Social cost benefits analysis is a part calculating the merits of a

project or a government policy Only after calculating the opportunity cost of a

project, it is approved.


It a bridge is to be constructed then how much will it benefits the people who live in that particular area, is to be analyzed

Therefore, how many people are willing t use the bridge, how much traffic will be reduced and what is the increase in cost of travelling,

will have to be assessed as a whole to come to a conclusion Suppose, if people are not willing to use the bridge is

the cost of travelling from the bridge is $5 to If $7 has to charged per vehicle to make this project feasible, then the government may consider dropping the project out


On the other hand, if people are willing to travel using the bridge, being indifferent to the toll price-difference of $2, and the traffic is reduced by good amount, then government will sanction the project

Therefore, it is beneficial to take up a project if its total benefits (B) are more than its total costs.

Thus, it can be said that if, B/C > 1 or even when B=C, Then a project can be under taken.


Before sanctioning a project, cost and benefits of alternative projects are assessed too.

For example, the opportunity cost of setting up a hospital instead of school


SCBA can be applied to both public and private investments

Public investment: SCBA is important specially for the developing countries where govt. plays a significant role in the Economic development

Private investments: Here, SCBA is also important as the private investments are to be approved by various governmental and Quasi-governmental agencies.


Market failure when a big project is not affecting everyone but only a few

A private firm would only look at profitability and related market prices to take up a deal but the government has to look at other factors

To determine the social cost of market failure and when market prices are unable to define them

These social costs are known as shadow prices.

Market


Impact of the project on general savings and investment level.

A project that includes more saving are investment in an economy and not the other way round

Saving & Investment

Distribution & Redistribution of income The project should not lead to

accumulating income in the hands of a few but, it should equally distribute the income.


Employment and Standard of living

Externalities Externalities are impacts of a project

which can be both harmful and beneficial

Therefore, both the effects are to be assessed before sanctioning a deal

How a project affect employment and standard of living will be taken into account as well.


Taxes and Subsidies In a general cost benefits calculation,

taxes and subsidies are considered as expenses and income respectively.

Though in case of social-cost benefits analysis, taxes and subsidies are considered as transfer payments.

Positive-externalities could b in the form improvement in technology and negative-externalities could be in the form of increase in population and destruction of ecology


ADDRESS: SCO -15, Dayal Bagh, Near Hanuman Mandir Ambala Cantt-133001 HaryanaPh. No.: 9729666670, 8222066670 &0171-4000670Email ID: [email protected]: www.batracomputercentre.com

Soical Cost Benefits Analysis ! Batra Computer Centre

Education

Transcript of Soical Cost Benefits Analysis ! Batra Computer Centre