What must be estimated to compare alternatives in an EA?

What must be estimated to compare alternatives in an EA?

• A. Costs only
• B. Benefits only
• C. Costs and qualitative factors
• D. Costs and benefits

Answer: (D)

In an Economic Analysis, you compare alternatives by weighing their economic effects on both sides: costs and benefits. Estimating both allows you to calculate net value and use decision metrics like net present value or benefit-cost ratios to determine which option offers the greater economic advantage. While qualitative factors can influence the choice, the essential basis for a meaningful comparison is having estimated costs and estimated benefits for each alternative. Focusing on only costs or only qualitative aspects wouldn’t provide the balanced view needed to judge overall value.

In an Economic Analysis, you compare alternatives by weighing their economic effects on both sides: costs and benefits. Estimating both allows you to calculate net value and use decision metrics like net present value or benefit-cost ratios to determine which option offers the greater economic advantage. While qualitative factors can influence the choice, the essential basis for a meaningful comparison is having estimated costs and estimated benefits for each alternative. Focusing on only costs or only qualitative aspects wouldn’t provide the balanced view needed to judge overall value.