The EA process employs two principles. Which statement best describes them?

The EA process employs two principles. Which statement best describes them?

• A. They must consider each feasible alternative, cost out for total life cycle, and adjust to PV; all costs and benefits evaluated.
• B. They compare only the chosen alternative and ignore others.
• C. They ignore non-economic impacts.
• D. They rely on qualitative judgments.

Answer: (A)

Economic analysis compares all feasible alternatives by evaluating life-cycle costs and benefits and discounting them to present value. This approach ensures you don’t fixate on a single option, but instead quantify the total costs and benefits across the entire life of the program and bring future values to a common time point for fair comparison. By doing so, you account for the time value of money and can assess which option delivers the best net value overall. Other choices try to limit the analysis to one option, ignore non-economic impacts, or rely solely on qualitative judgment, which prevents an apples-to-apples, comprehensive comparison.

Economic analysis compares all feasible alternatives by evaluating life-cycle costs and benefits and discounting them to present value. This approach ensures you don’t fixate on a single option, but instead quantify the total costs and benefits across the entire life of the program and bring future values to a common time point for fair comparison. By doing so, you account for the time value of money and can assess which option delivers the best net value overall. Other choices try to limit the analysis to one option, ignore non-economic impacts, or rely solely on qualitative judgment, which prevents an apples-to-apples, comprehensive comparison.