Answer to Question #49722 in Economics of Enterprise for Obinna

Question

Why pay for cost-benefit analysis to decide which public programs are worthwhile instead of using prices to let the market decide?

Answer 1

Cost–benefit analysis (CBA), sometimes called benefit–cost analysis (BCA), is a systematic approach to estimating the strengths and weaknesses of alternatives that satisfy transactions, activities or functional requirements for a business. It is a technique that is used to determine options that provide the best approach for the adoption and practice in terms of benefits in labor, time and cost savings etc.
It is better to pay for cost-benefit analysis to decide which public programs are worthwhile instead of using prices to let the market decide, because sometimes market inefficiently distributes and uses some abilities, like social programs or medical care.