The search for the least costly way of providing a desired public good is referr
ID: 446152 • Letter: T
Question
The search for the least costly way of providing a desired public good is referred to as which of the following?
a. contingent valuation
b. revealed preference
c. cost-benefit analysis
d. social discounting
e. cost-effectiveness analysis
The accounting method that calculates costs solely by adding up what the government pays for inputs to a project and calculates benefits solely by adding up government revenues generated by the project is which of the following?
a. contingent valuation
b. cash-flow
c.cost-benefit
d. social discounting
e. present-value discounting
If an input is sold in a perfectly competitive market, its price is equal to which of the following?
a. its average cost
b. its opportunity cost
c. its cost-benefit ratio
d. its cash flow premium
e. Both a and b are correct.
If the present discounted value of $134 next year is $115 this year, then what is the implied annual rate of interest?
a.7.63%
b. 9.5%
c. 13.34%
d. 19%
e. None of the answers is correct
Suppose that you estimate the value of life by comparing the earnings and probabilities of death from working on a fishing boat in Alaska to the earnings and probabilities of death from working in a fish processing plant in Alaska. You find that a year of life is valued at $6 million. If risk-loving people take the jobs on the boats and risk-averse people take jobs at the processing plants, then what will be true of your estimate?
a. It will overstate by at least two times the value of a life for the average person.
b. It will overstate by an unknown amount the value of a life for the average person.
c. It will be approximately equal to the value of a life for the average person.
d.It will understate by an unknown amount the value of a life for the average person.
e. It will understate by at least two times the value of a life for the average person.
Explanation / Answer
It will be approximately equal to the value of a life for the average person.