Lesson 1.9- Cost and Benefit Analysis

  • Lesson 1.9- Cost and Benefit Analysis

    Learning Goals: By the end of this lesson you will be able to

    • The goal of this lesson is to understand how to make informed personal financial decisions by understanding the benefits and costs of common financial choices. It aims to improve financial literacy, encourage critical thinking, apply knowledge to real-life scenarios, and emphasize the importance of long-term planning for achieving financial well-being and life goals.



    • Icebreaker FORUM

      How can cost benefit analysis help you in decision making?


    • Lesson Glossary

      Transfer payments
       Direct payments from governments to other governments or to individuals; a mechanism for providing social security, income support, and alleviation of regional disparities. 

      Externalities are the side effects of an economic activity that affect other people who are not directly involved in it. These effects can be positive (helpful) or negative (harmful).

      👉 Examples:

      • Negative externality: A factory pollutes a river. People living nearby suffer, even though they aren’t part of the factory’s business.

      • Positive externality: A homeowner plants a beautiful garden. Neighbors enjoy it, even though they didn’t pay for it.

      Inflation
       A general rise in the price levels of an economy.

      Deflation
       A general fall in the price levels of an economy. 

      Balance of payments account
       National account of international payments and receipts, divided into current account, and capital and financial account. 

    • Lesson Exit Card Questionnaire

      Students to complete this after you've finished all activities/tasks in today's lesson.

    • answer

      1. What negative externalities are associated with the tobacco industry?

      • Health problems (lung cancer, heart disease, second-hand smoke)

      • Increased healthcare costs

      • Litter from cigarette butts and pollution

      2. Who bears the costs associated with these externalities?

      • Smokers (through poor health)

      • Non-smokers (through second-hand smoke)

      • Taxpayers and governments (through higher healthcare costs)

      • Society as a whole (through lost productivity and pollution)

      3. What are some government policies that attempt to reduce these costs?

      • High taxes on cigarettes

      • Health warnings and advertising bans

      • Smoke-free laws in public places

      • Public health campaigns to reduce smoking

      4. What are the positive and negative externalities associated with constructing dedicated bicycle lanes in a city?

      • Positive: Less traffic congestion, lower pollution, better public health, safer travel for cyclists

      • Negative: High construction costs, less road space for cars, possible disruption during building

      5. What are some of the environmental costs of economic growth?

      • More pollution and greenhouse gas emissions

      • Deforestation and loss of biodiversity

      • Overuse of natural resources

      • Waste and environmental damage from industries

      6. Can there be environmental benefits to such growth?

      • Yes, if growth is sustainable:

        • More investment in clean energy and green technology

        • Better waste management systems

        • Improved public transportation

        • Higher incomes can mean more demand for environmental protection