101.Whichofthefollowingisanapproachusedbyeconomiststocalculatethevalueofahumanlife? a.comparingthesalariesofpeoplewholiveincitieswithmoretrafficlightstothosewholiveincitieswithfewertrafficlights b.comparingthewagesofmoreriskyoccupationstolessriskyoccupations c.comparingthecostsofvehicleswithsafetyfeaturessuchasside-impactairbagstothosewithoutsuchsafetyfeatures d.Alloftheabovearecorrect. 102.Miguel,Maria,andMarcosallwouldlikeaplacetositwhilewaitingattheirchildren’sbusstop.Theneighborhoodassociationisconsideringinstallingseveralparkbenchesatthebusstop.Miguelvaluesthebenchesat$20,Mariaat$30,andMarcosat$40.Theparkbenchesandlaborforinstallationcost$100.IfMiguel,Maria,andMarcosaretheonlyresidentswhovaluethebenches,whatshouldtheneighborhoodassociationdo? a.Installtheparkbenchesbecausepeoplelikeplacestosit. b.Installtheparkbenchesbecausethebenefitsoutweighthecosts. c.Donotinstalltheparkbenchesbecausethecostsoutweighthebenefits. d.DonotinstalltheparkbenchestopreventtheTragedyoftheCommonsproblemofoveruse. 103.SupposethattheTownofMapledaleisconsideringhiringanadditionalfirefighter.Theexpectedbenefitisestimatedtobeworth$5foreachofMapledale’s15,000residents.Whatshouldthecitydo? a.Hirethefirefighterbecauseadditionalfireprotectionispriceless. b.Hirethefirefighterifthecostofthenewfirefighterislessthan$75,000. c.Donothirethefirefighterbecausethecostsexceedthebenefits. d.Hirethefirefighteronlyifthebenefittotheresidentsexceeds$75,000. 104.Supposethatasmallcountyisconsideringaddingaguardrailtoadangerouscurvebyariver.Theguardrailwillcost$70,000.Theaveragedamagedonetovehiclesthatslideofftheroadatthecurveis$10,000.Itisexpectedthattheguardrailwillprevent5vehiclesfromslidingofftheroadduringitsusablelife.Whatshouldthecountydo? a.Installtheguardrailbecausesafetyispriceless. b.Installtheguardrailbecausethebenefitsexceedthecosts. c.Donotinstalltheguardrailbecausethecostsexceedthebenefits. d.Donotinstalltheguardrailatanycostbecausedriverscanpurchaseprivateinsurancefortheirvehicles. 105.Economiststhinkthatthebestwaytodeterminethevalueofahumanlifeisto a.evaluatethevalueofaperson’sexpectedearningsinthelabormarket. b.evaluatetheriskspeoplearewillingtotakeandwhattheywouldhavetobepaidtotakethem. c.determineaperson’saccumulatedwealthatthetimeofdeath. d.donothing;humanlifeispriceless. 106.Acost-benefitanalysisofahighwayisdifficulttoconductbecauseanalysts a.cannotestimatetheexplicitcostofaprojectthathasnotbeencompleted. b.areunlikelytohaveaccesstocostsonsimilarprojects. c.arenotabletoconsidertheopportunitycostofresources. d.willhavedifficultyestimatingthevalueofthehighway. 107.Cost-benefitanalystsoftenencountertheproblemthatthosewhowouldbenefitfromgovernmentprovisionofapublic good tend to a.overstatethebenefittheywouldreceivefromthepublicgoodandthosewhowouldbeharmedbygovernmentprovisionofapublicgoodtendtooverstatethecoststheywouldincurfromthepublicgood. b.overstatethebenefittheywouldreceivefromthepublicgoodandthosewhowouldbeharmedbygovernmentprovisionofapublicgoodtendtounderstatethecoststheywouldincurfromthepublicgood. c.understatethebenefittheywouldreceivefromthepublicgoodandthosewhowouldbeharmedbygovernmentprovisionofapublicgoodtendtooverstatethecoststheywouldincurfromthepublicgood. d.understatethebenefittheywouldreceivefromthepublicgoodandthosewhowouldbeharmedbygovernmentprovisionofapublicgoodtendtounderstatethecoststheywouldincurfromthepublicgood. 108.Simplyaskingpeoplehowmuchtheyvalueahighwayisnotareliablewayofmeasuringthebenefitsandcostsbecause a.thosewhostandtogainhaveanincentivetotellthetruth. b.thosewhostandtolosehaveanincentivetoexaggeratetheirtruecosts. c.answerstothesurveyquestionswillalwaysbedownwardlybiased. d.noteveryoneaskedwillbeusingthehighway. 109.Thegreatestdifficultywithcost-benefitanalysisofapublicprojectisdetermining a.whethergovernmentrevenueissufficienttocoverthecostoftheproject. b.whichcontractorshouldbeawardedtheproject. c.thecostoftheproject. d.thevalueorbenefitoftheproject. 110.Eachofthefollowingexplainswhycost-benefitanalysisisdifficultexcept a.thereisnopricewithwhichtojudgethevalueofapublicgood. b.surveysareoftenbiasedandunreliable. c.itisdifficulttoidentifyallfactorsthatinfluencecostsandbenefitsofpublicgoods. d.governmentprojectsrarelyhavesufficientfundingtocompletethemontime.