American Institute of Certified Planners (AICP) Practice Exam

The analysis that determines the cost-effectiveness of one community sector providing services is known as?

1. Cost-Benefit Analysis

2. Cost-Revenue Analysis

3. Efficiency Analysis

4. Service Distribution Study

The correct answer is: Cost-Revenue Analysis

The analysis that specifically evaluates the cost-effectiveness of services provided by a community sector is known as Cost-Revenue Analysis. This analysis focuses on comparing the costs incurred in delivering services against the revenues generated from these services. It helps planners and decision-makers understand whether the funding and resources allocated to a particular sector yield a net benefit to the community, assuming the services are funded through user fees, taxes, or other revenue sources. Cost-Revenue Analysis is crucial for budgeting and resource allocation within a community because it provides insights into financial sustainability, allowing planners to assess which services are providing adequate returns on investment. By analyzing the ratio of costs to revenues, a more strategic approach can be developed to enhance service provision efficiency and effectiveness. Other types of analyses mentioned in the options have different focuses; for example, Cost-Benefit Analysis looks at a broader context of both direct and indirect costs and benefits of a project or policy, while Efficiency Analysis tends to concentrate on the operational efficiency of service delivery rather than the financial aspects. Service Distribution Studies focus on how resources or services are allocated across geographical areas or demographic groups, which does not directly assess cost-effectiveness. Therefore, the focus on revenue generation and expenditure makes Cost-Revenue Analysis the most appropriate choice for determining the cost