cost-benefit-analysis

Vocabulary Word

Definition

'Cost-benefit analysis' is a business term. It's a way of thinking that compares the advantages (benefits) and disadvantages (costs) of a decision or action. It helps to choose the best option where gain from the action is more than the loss.

Examples in Different Contexts

In policy making, cost-benefit analysis is used to assess the economic impacts of proposed regulations or policies. A policy analyst might explain, 'The cost-benefit analysis helps us understand the overall economic implications of implementing new environmental regulations.'

Practice Scenarios

Tech

Scenario:

The team is discussing the possibility of upgrading our hardware systems. Having better technology could undoubtedly boost our performance, but we need to consider affordability.

Response:

We should certainly do a cost-benefit analysis. It would help us balance the potential performance improvements against the costs of hardware upgrade.

Business

Scenario:

Our company is considering acquiring a new start-up. Their innovative technology is impressive, but we need to think about the finances as well.

Response:

I agree, before making any decision, let's perform a thorough cost-benefit analysis to see if acquiring the start-up will be beneficial in the long run.