Question

Given below are two statements :
Statement I : Cost-Benefit Analysis (CBA) measures a project's societal effects and does costs and benefits comparable in monetary terms.
Statement II : CBA is most widely applied tool for the appraisal of transport project.
In the light of the above statements, choose the correct answer from the options given below :

• A. Both Statement I and Statement II are true
• B. Both Statement I and Statement II are false
• C. Statement I is true but Statement II is false
• D. Statement I is false but Statement II is true

Hint:

CBA = (Total Benefits in \textdollar) $-$ (Total Costs in \textdollar). If the result is positive, the project is considered feasible.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
Cost-Benefit Analysis (CBA) is a systematic process that businesses and governments use to analyze which decisions to make and which to forgo. It involves summing the potential rewards expected from a situation or action and then subtracting the total costs associated with taking that action.
Step 2: Detailed Explanation:
1. Statement I: CBA is unique because it attempts to quantify even intangible societal effects (like time saved or lives saved) into monetary values so they can be compared against the monetary investment (costs). This makes Statement I true.
2. Statement II: In public infrastructure, especially transport projects (highways, railways, bridges), CBA is the standard tool used to justify the use of public funds by showing the net social benefit. Thus, Statement II is true.
Step 3: Final Answer:
Both statements accurately reflect the nature and application of Cost-Benefit Analysis.