Question

4. Cost-benefit analysis A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing Thus, the visual appearance would a nd For the students of the college, the visual appearance of the campus is be classified as a public good. Suppose the college administrators estimate that the beautification initiative will cost $8,000. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 370 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $16. than the The benefit of the beautification initiative, as suggested by the survey, is . Because the estimated benefit is cost, the college administrators undertake the beautification initiative. The calculation of the benefit of the beautification initiative relied on the ability of the administrators to capture the true willingness to pay of each student accurately yield misleading data on willingness to pay Check all Which of the following scenarios would cause the survey used by the that apply Students believe they will eventually be charged their willingness Students believe that the initiative does not happen, the funds for the initiative will not be spent else

Answer 1

Ans) Cost benefit analysis is done to decide whether a work should be done or not. If benefit exceeds cost, work should be done otherwise not.

4. Cost-benefit analysis A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. non rivalrous non excludable For the students of the college, the visual appearance of the campus is Hand Thus, the visual appearance would be dassified as a public good. Suppose the college administrators estimate that the beautification initiative will cost $8,000. Yo decide whether the initiative should be undertaken, administrators conduct a survey of the college' 320 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $16. Benefit=370x16= 5920 The benefit of the beautification initiative, as suggested by the survey, is $5920 . Because the estimated benefits than the cost, the college administrators undertake the beautification initiative. should not The calculation of the benefit of the beautification initiative relied on the ability of the administrators to capture the true willingness to pay of each student accurately. Which of the following scenarios would cause the survey used by the college administrators to yield misleading data on willingness to pay? Check all that apply Students believe they will eventually be charged their willingness to pay Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere