Removing the silencer could, in fact, result in economic harm rather than benefit if sales plummeted. However, consumers are willing to pay more for less noise. Not fitting the silencer would save a lot of money, i.e., it would represent a significant economic benefit. However, if a proposal’s economic benefit is less than the potential harms, the decision-makers may turn it down.ī says that economic benefit is a: “Benefit quantifiable in terms of money, such as revenue, net cash flow, net income.”įor example, let’s suppose that a lawnmower’s silencer represents 25% of its production cost. If the proposer did not include the benefits in the proposal, the directors are much less likely to approve it.Įxplaining what the economic benefits are helps them determine whether the proposal should go ahead. When company directors are looking at a proposal, they carefully consider its economic benefits. “Making a business case for a new strategy or product idea usually involves pointing out the economic benefits of the proposal to decision makers.” “A benefit that can be expressed numerically as an amount of money that will be saved or generated as the result of an action.” has the following definition of the term: In this context, ‘ labor‘ refers to the ‘ workforce.’ For example, lower raw material or labor costs are economic benefits. Profit and net cash flow are also economic benefits.Īn economic benefit may also refer to a reduction in something such as a cost.
Net income and revenues, for example, are forms of economic benefit. An economic benefit is any benefit that we can quantify in terms of the money that it generates.