Question

You have been asked to undertake a cost-benefit analysis of a switch to all
postconsumer content recycled paper at the Cal State University System
a. What condition for allocative efficiency does cost-benefit analysis attempt to achieve?
Use a graph or an equation in your explanation.
b. What specific costs and benefits would you quantify? List them and discuss the likely
timing of the costs and benefits (that is, discuss whether the costs and benefits would be
in early years, later years, or spread evenly throughout the ten years).
c. Write down the equations that you would use to compare benefits and costs, and explain
exactly how you would adjust future benefits and

Answer 1

a) when the private marginal cost of production is reflected by the market price paid by consumers then the allocative efficiency occurs.there is a condition for a firm's allocative efficiency for production of an output where marginal cost is equal to price. When there is is optimal distribution of goods and services equally in response to the demands of the consumer having the marginal cost equal to the marginal utility leads to the achievement of allocative efficiency.
b) the specific cost and benefit quantification am to obtaining of value for money from the economic perspective.the specific benefits are quantified by benefit to the buyers, number converted to values at bottom lines, value added benefits are linked together. The cost of the project divided among the anticipated returns form the equation of cost benefit. The ratio is positive when the projected revenue is more of the projected cost. Variables like inflation and discounting principles help in accounting of cost benefits. Modelling as well as company e the cost and benefits like product development of cost versus revenue. Estimates used include payback period and return on investment.
c)total cost and total benefits are calculated and compared for tax determination of whether the benefits outway the cost. The cost-benefit is calculated by total cash being divided by benefit total cash from a project by the the purposed of total cash of the project.the cost benefit analysis provides an opportunity for delivering into specifies about spending for the launch of the product and investment done for its advertisement.