Benefit-Cost analysis – a
comparison of economic benefits and costs to society of a policy, program, or action.
Bequest
Value (option demand)– the value that people place on knowing that future generations will have the option to enjoy
something.
Consumer
surplus –the difference between the price actually paid for a good, and the maximum amount that an individual is willing
to pay for it. Thus, if a person is willing to pay up to $3 for
something, but the market price is $1, then the consumer surplus for that item
is $2. This measure approximates, and is bounded by, the more
technically precise measures of economic benefit: compensating
variation or equivalent variation.
Compensating variation - the
amount of money that leaves a person as well off as they were before a change. Thus, it
measures the amount of money required to maintain a personÕs satisfaction, or economic
welfare, at the level it was at before the
change.