Quiz 2

In the figure below, the total costs of 15,000 inoculations are $15,000. At this level of inoculations, the benefit-cost ratio is:

A. 5.5 B. 5.0 C. 3.0 D. 2.0 A. 5.5

In the figure above, the market benefit/cost ratio at quantity equal to 50 is:

A. 1.0 B. 1.5 C. 2.5 D. 5.0 B. 1.5

In the figure above, the total benefits when quantity equals 50 are:

A. 250 B. 500 C. 750 D. 1000 C. 750

In the figure above, at a quantity equal to 50, the sum of the producers' and the consumers' surpluses is:

A. 475 B. 425 C. 325 D. 225 A. 475

Consider a project with a cost of $10 million per year for 10 years. Assuming that the costs are paid the last day of each year, the present discounted value of these costs, using a 5% discount rate is __________ million:

A. $100 B. $77.2 C. $66.5 D. $44.3 B. $77.2

Consider a project with costs of $10 million per year for 10 years. Assuming that the costs are paid the last day of each year, the present discounted values of these costs, using a 4% discount rate is________________ million:

A. $100 B. $81.1 C. $77.2 D. $44.3 B. $81.1

The Stern Report seeks to discount $6,000 billion of annual benefits occurring 100 years from now. If these are discounted at a rate of 4%, the present discounted value of the benefits will be approximately:

A. $828.2 billion B. $455.7 billion C. $118.8 billion D. There is not enough information provided. C. $118.8 billion

The Stern Report seeks to discount $6,000 billion of annual benefits occurring 100 years from now. If these are discounted at a rate of 2%, the present discounted value of the benefits will be approximately:

A. $828.2 billion B. $455.7 billion C. $118.8 billion D. There is not enough information provided. A. $828.2 billion

In the problem (12), with a 4% discount rate, the benefit-cost ratio is:

A. 0.94 B. 1.06 C. 1.18 D. 2.17 B. 1.06

A project has costs of $10 million per year for 10 years. The benefits of $30 million per year occur in years 7, 8, 9, and 10. At a 5% discount rate, is this project socially desirable? (Assume that costs and benefits accrue on the last day of each year).

A. The project is socially desirable; net benefits are $20 million. B. The project is socially desirable; net benefits are $2.2 million. C. The project is socially undesirable; net benefits are -$0.7 million. D. The project is socially undesirable; net benefits are -$20 million B. The project is socially desirable; net benefits are $2.2 million

The "micro-costing" method (as noted in Figure 4.4 in the textbook):

A. assigns the same level of costs to each participant B. assigns the same level of benefits to each participant C. directly measures the costs relevant to each participant D. verifies market outcomes by benefit: cost criteria C. directly measures the costs relevant to each participant

Comparing the "cost/cancer" saved of various screening programs is an example of __________________ analysis:

A. cost-efficiency B. cost-benefit C. economic efficiency D. all of the above A. Cost-efficiency

In Figure 4.5 in the textbook, a city is currently abating pollution at level Q2. They are debating whether to abate pollution at level Q3 or level Q1. They should choose:

A. level Q3 because it is less costly than Q1 B. Level Q3 because marginal benefits exceed marginal costs C. level Q1 because it is less costly than Q2 D. level Q1 because well-being is maximized when marginal benefits equal marginal costs D. level Q1 because well-being is maximized when marginal benefits equal marginal costs

In screening programs, the________________ the probability of an incorrect or "false" positive finding, the _________________ effective the screening program is:

A. lower, less B. lower; more C. higher; less D. Answers (b) and (c) are correct D. Answers (b) and (c) are correct.

The social optimum:

A. minimizes total costs B. maximizes total benefits C. maximizes the sums of the consumers' and producers' surpluses D. Answers (a) and (b) are correct C. maximizes the sums of the consumer's and producers' surpluses

In the figure above, if 60 units of quantity is produced:

A. society is not at an optimal level of outputs because marginal costs exceed marginal benefits at that level B. society's well-being is improved because marginal benefits are still positive. C. one can draw a "loss triangle" involving the marginal benefit and marginal cost lines. D. Answers (a) and (c) are correct D. Answers (a) and (c) are correct

In Figure 4.5 in the textbook, a city is currently abating pollution at level Q3. To increase welfare, decision-makers should:

A. stay at level Q3 B. reduce efforts to Q2 C. increase efforts to Q1 D. strive to eliminate pollution by 100% C. increase efforts to Q1

The social optimum occurs when:

A. total benefits have been maximized. B. Total costs have been minimized C. total costs equal total benefits D. Marginal costs equal marginal benefits D. Marginal costs equal marginal benefits