Cost-Benefit Analysis Worksheet

Cost-Benefit Analysis: Making Smart Choices

Read each question carefully and answer to the best of your ability. This worksheet will test your understanding of cost-benefit analysis and how to apply it to real-world situations.

Cost-benefit analysis is a process that helps us make decisions by comparing the total costs of an action with its total benefits. If the benefits outweigh the costs, then the decision is usually a good one. If the costs outweigh the benefits, it might be wise to reconsider.

1. In a cost-benefit analysis, you compare the total   of an action with its total  .

2. If the benefits are greater than the costs, the decision is generally considered a   one.

3. Which of the following is an example of a 'cost' when deciding to buy a new video game?

4. What is a 'benefit' of choosing to walk to school instead of taking the bus?

5. Describe a situation where you might use a cost-benefit analysis in your daily life. Identify at least one cost and one benefit in your example.

6. A cost-benefit analysis only considers the financial aspects of a decision.

7. Intangible factors like happiness or convenience are never considered in a cost-benefit analysis.

Read the scenario below and answer the questions that follow.

Scenario: Your family is deciding whether to go on a vacation to a nearby beach for a weekend or to save the money for a bigger trip next year. The beach trip would cost $300 for accommodation and food. The benefits would be relaxation, fun with family, and a break from routine. Saving the money would mean no immediate fun, but a potentially more exciting and longer trip next year.

8. What are the main costs associated with the beach trip?

9. What are the main benefits associated with the beach trip?

10. What are the costs and benefits of saving the money for a bigger trip next year?

11. Based on a cost-benefit analysis, which option would you choose for your family and why?