What is a cost-benefit analysis primarily used for?

A cost-benefit analysis is a systematic approach to estimating the strengths and weaknesses of alternatives used in decision-making and resource allocation. It primarily focuses on comparing the expected costs of an action or project against its anticipated benefits. By evaluating these factors, organizations, governments, or individuals can make informed choices about how to allocate their resources effectively.

This method is particularly useful in making trade-offs, as it enables stakeholders to weigh the advantages and disadvantages of different options to optimize outcomes. For example, when deciding between two projects, a cost-benefit analysis helps to clarify which project offers the best return on investment or highest overall benefit relative to its costs.

The other options do touch on relevant aspects of what can be associated with cost-benefit analysis, such as measuring environmental impacts, evaluating financial investments, and determining social impacts of legislation. However, the primary utility of cost-benefit analysis lies in its focus on making informed trade-offs in resource allocation, making it the most aligned choice for understanding the primary use of this analytical tool.