Economic Analysis of Investment and Regulatory Decisions--A Guide.

Every entity, whether public or private, is confronted with the economic problem it wishes to accomplish more objectives than its resources will permit. This problem requires that two fundamental economic questions be answered 1 what objectives should be pursued, and 2 how should these objectives be accomplished. In general, the answer to the first question is that an objective should be undertaken only when the value to be derived from undertaking it equals or exceeds what must be foregone to achieve it--its cost. The general answer to the second question is that each objective undertaken should be accomplished for the least amount of resources possible--or for the lowest cost. Economic analysis provides a systematic approach to answering the economic questions. This Handbook presents methodology for applying economic analysis to problems commonly encountered by the Federal Aviation Administration. Techniques are developed for measuring such benefits as improved safety, delay reductions, cost savings as well as others. Cost estimation methodology is also presented. Author