American Institute of Certified Planners (AICP) Practice Exam

What type of analysis systematically compares costs of services to payments from a community section?

1. Cost-Benefit Analysis

2. Cost-Revenue Analysis

3. Fiscal Impact Study

4. Return on Investment

The correct answer is: Cost-Revenue Analysis

The correct answer is Cost-Revenue Analysis. This type of analysis focuses specifically on evaluating the financial implications of providing services to a community by comparing the costs incurred in delivering those services against the revenue generated from the community, such as taxes, fees, and other types of payments. This systematic assessment helps planners understand whether the revenue produced is sufficient to cover the costs of the services being provided, which is crucial for sustainable financial planning and resource allocation. Cost-Revenue Analysis informs decision-making processes by highlighting potential deficits or surpluses, guiding policymakers in budgetary planning and service provision adjustments. By comparing these two aspects, communities can identify which services are financially viable and which may require reevaluation or restructuring. This analysis is distinct from other methods mentioned, such as Cost-Benefit Analysis, which evaluates broader economic impacts and may consider qualitative factors, or Fiscal Impact Studies that assess how a new project or policy affects a community's financial situation without the direct focus on services' costs versus community payments. Return on Investment typically evaluates the profitability of investments rather than focusing specifically on community service costs and revenues.