Cost–Benefit Analysis
1 Distinguish between a Pareto improving allocation of resources and a potential Pareto improvement.
2 Calculate the present value of future cash flows.
3 State the present value criteria for project evaluation.
4 Distinguish between the social discount rate and rates based on private sector returns.
5 Explain how to estimate the shadow prices of commodities.
6 Explain how to use changes in consumer surplus to estimate a project’s benefits.
7 Infer the value of non-traded goods by observing economic behaviour.
8 Define the certainty equivalent of a risky benefit or cost.
9 State three common pitfalls in conducting cost–benefit analysis.
