111.Supposethatpolicymakersaredoingcost-benefitanalysisonaproposaltoaddtrafficbarrierstodividetheflowoftrafficinanefforttoincreasesafetyonagivenhighway.Whichofthefollowingstatementsiscorrect?
a.Thebenefitsareusuallyeasiertomeasurethanthecosts.
b.Becausehumanlifeispriceless,anymeasuretoincreasetrafficsafetywouldgeneratebenefitsthatoutweighthecosts.
c.Estimatingthevalueofahumanlifeisdifficultbutnecessarytoevaluatetheproposal.
d.Bothaandbarecorrect.
112.Inacost-benefitanalysis,thevalueofahumanlifeissometimescalculatedonthebasisof
a.therisksthatapersonvoluntarilyexposesherselftoinherjoband/orrecreationalchoices.
b.thevalueofeachindividual’sassets.
c.thebeliefthathumanlifeispriceless.
d.theamountofresourcesrequiredtoadequatelysustainlife.
113.Cost-benefitanalysisisimportanttodeterminetheroleofgovernmentinoureconomybecause
a.thegovernmentshouldprovideallgoodsforwhichthebenefitsexceedthecosts.
b.cost-benefitanalysisidentifiesthepossiblegainstosocietyfromgovernmentprovisionofaparticulargood.
c.marketsforprivategoodscannoteffectivelyassigncostsandbenefits.
d.cost-benefitanalysisisthebesttooltoidentifymarketfailures.
114.Beforeconsideringanypublicproject,thegovernmentshould
a.(i)only
b.(ii)only
c.(i)and(ii)only
d.(i),(ii),and(iii)
115.Highwayengineerswanttoimproveadangerousstretchofhighway.Theyexpectthatitwillreducetheriskofsomeonedyinginanaccidentfrom5.3percentto2.1percentoverthelifeofthehighway.Ifahumanlifeisworth$10million,thentheprojectisworthdoingaslongasitdoesnotcostmorethan
a.$53,000.
b.$210,000.
c.$320,000.
d.$2.1million.
116.Afterarecentspikeinviolentcrime,thelocalpolicedepartmentwantstospend$550,000onanewcrimefightinginitiative.If ahumanlifeisworth$9million,thecrimefightinginitiativeisworththecostifitreducestheriskofsomeonedyingfromcrimebyatleast
a.3.5percentagepoints.
b.5.5percentagepoints.
c.6.1percentagepoints.
d.9.0percentagepoints.
117.Toincreasesafetyatabadintersection,themayormustdecidewhethertoinstallatrafficlightatacostof$45,000.
a.installthelightbecausetheexpectedbenefitof$400,000isgreaterthanthecost.
b.installthelightbecausetheexpectedbenefitof$45,000isgreaterthanthecost.
c.notinstallthelightbecausetheexpectedbenefitof$45,000isonlyequaltothecost.
d.notinstallthelightbecausetheexpectedbenefitof$40,000islessthanthecost.
118.Atownengineercomestothecitycouncilwithaproposaltoinstallatrafficlightatacertainintersectionthatcurrentlyhasastopsign.Thebenefitofthetrafficlightisincreasedsafetybecausethelightwillreducetheincidenceoffataltrafficaccidentsby50percentperyear.Whichofthefollowingstatementsiscorrect?
a.Thecitycouncilshouldvotetoinstallthetrafficlightbecausethebenefitswilloutweighthecosts.
b.Thecitycouncilshouldcarefullyevaluatethebenefitsofreducedfatalitiesagainstonlytheexplicitcostsofthelight.
c.Thecitycouncilshouldcarefullyevaluatethebenefitsofreducedfatalitiesagainstthecostsofthelightandoftheextratimethatdriverswillspendwaitingforagreenlight.
d.Thecostswillinvariablyoutweighthebenefits.
119.Supposethatinstallinganoverheadpedestrianwalkwaywouldcostacollegetown$150,000.Thewalkwayisexpectedtoreducetheriskoffatalityby3percent,andthecostofahumanlifeisestimatedat$10million.Thetownshould
a.installthewalkwaybecausetheestimatedbenefitistwicethecost.
b.installthewalkwaybecausetheestimatedbenefitequalsthecost.
c.notinstallthewalkway,sincethecostistwicetheestimatedbenefit.
d.installthewalkway,sincethecostofevenasinglelifeistoogreatnottotakeaction.
120.Supposethatthecostofinstallinganoverheadpedestrianwalkwayinacollegetownis$150,000.Thewalkwayisexpectedtoreducetheriskoffatalityby1.5percent,andthecostofahumanlifeisestimatedat$10million.Thetownshould
a.installthewalkwaybecausetheestimatedbenefitistwicethecost.
b.beindifferentbetweeninstallingandnotinstallingthewalkwaybecausetheestimatedbenefitequalsthecost.
c.notinstallthewalkway,sincethecostistwicetheestimatedbenefit.
d.installthewalkway,sincethecostofevenasinglelifeistoogreatnottotakeaction.
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