What is a cost-benefit analysis used for?

A cost-benefit analysis is a systematic approach to estimating the strengths and weaknesses of alternatives in order to determine the best option based on their costs and benefits. It is used to evaluate the overall value of a project or decision by comparing the anticipated costs against the expected benefits. This process allows businesses and individuals to make informed decisions by assessing whether the benefits of an option justify the costs associated with it.

In the context of decision-making, option B accurately captures the essence of a cost-benefit analysis. By weighing costs against benefits, organizations can prioritize projects, allocate resources efficiently, and minimize financial risks. The analysis can apply to various scenarios, such as investment decisions, project feasibility, or even policy formulation.

Other options, while relevant to business practices, do not directly relate to the purpose of a cost-benefit analysis. Visualizing inventory constraints, calculating employee productivity rates, and determining marketing effectiveness are all key management tasks, but they do not include a comparison of costs and benefits in the way that a cost-benefit analysis is designed to achieve.