American Institute of Certified Planners (AICP) Practice Exam

Which analysis compares community gains from a project to what must be sacrificed?

1. Cost-Revenue Analysis

2. Cost-Benefit Analysis

3. Fiscal Impact Study

4. Economic Impact Assessment

The correct answer is: Cost-Benefit Analysis

Cost-Benefit Analysis is the process that compares the total expected community gains from a project against the total expected costs or sacrifices associated with it. This analysis quantifies both the benefits and the costs in monetary terms, which allows for a straightforward comparison. By doing so, planners can gauge whether the anticipated benefits of a project justify the resources that must be allocated or the negative impacts that might arise. In this analysis, benefits may include improved public amenities, increased property values, or enhanced social outcomes, while costs could involve financial expenditures, environmental degradation, or displacement of residents. The ultimate goal is to ensure that the projects undertaken yield a net positive effect on the community. Other types of analysis, such as Fiscal Impact Studies and Economic Impact Assessments, focus on specific aspects like government revenues or employment effects, but do not fully encapsulate the broader comparison of gains versus sacrifices in the same manner as Cost-Benefit Analysis. The focus on comprehensive evaluation of both benefits and costs solidifies Cost-Benefit Analysis as the most suitable choice for this question.