Economic analysis aims to answer affirmative questions like "what is," hence it cannot provide a response for such questions.
Costs and benefits are essentially assessed as part of economic study. To help with better resource allocation, initiatives are first ranked according to their economic viability. Its objective is to assess how a project would affect welfare. Following are some queries or problems that economic analysis can help with:
• Is the public or private sector better suited to carry out the project?
• How much money will the project cost?
• How will we make sure that cost recovery is efficient and equitable?
• What will a project's environmental impact be?
The three main components of economic analysis are as follows: As follows:
1. Recognizing and estimating costs associated with an investment
2. Identifying and estimating the advantages of a potential investment.
3. In order to assess if an investment is suitable, costs and benefits are compared.
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