4. Cost-benefit analysis is deciding whether to conduct a campus beautification

Question

4. Cost-benefit analysis is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and A local college remodeling buildings, to make the campus more aesthetically pleasing. and Thus, the visual appearance For the students of the college, the visual appearance of the campus is would be classified as a public good. rival Suppose the college administrators estimate that the beautfication initial non-rivalt$4,320. To decide whether the initiative should be administrators conduct a survey of the college's 210 students, asking eaer ortheir willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $16 The benefit of the beatification initiative, as suggested by the survey, is . Because the estimated benefit is than the cost, the college administrators Y undertake the beautification initiative The calculation of the benefit of the beatification initiative relied on the ability of the administrators to accurately capture the true willingness-to-pay of each student Which of the following scenarios would cause the survey used by the college administrators to yield misleading willingness-to-pay data? Check all that apply An equal number of male and female students were surveyed. Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.

Explanation / Answer

1) non rival

2) non excludable

3) total benefit = 210 x 16 = $ 3360

4) Less

5) should not

6) Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.

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