Fisheries Economics

4.1.4. Cost – benefit ratio

It indicates the returns on a rupee of investment or expenditure. It reflects profitability of an economic activity. It is estimated on two-bases, on the basis of variable cost as well as total cost.                       

                                          Total Income

Cost - benefit ratio = ----------------------------

(Variable cost basis)    Total variable cost

                                        Total Income

Cost – benefit ratio =-----------------------------

(Total cost basis)              Total cost

A cost – benefit ratio of over 1 indicates that the activity is profitable.