Reference no: EM13539629

1. What is the rationale for discounting when you calculate the cost and benefits of government programs?

2. Amortize an investment of $50,000 for a three-year period at an interest rate of 7%.

3. Describe one reason why the consumer price index overstates the inflation rate.

4. Explain in your own words this passage from the reading by Viscusi:

"Noneconomists speculating on what must be meant by the economic value of life typically think of accounting measures, such as the present value of lost earnings. These human capital measures are not an appropriate guide to the value of life from the standpoint of preventing accidental deaths. As will be indicated below, statistical evidence on the value of a statistical life suggests that these values are roughly an order of magnutide greater than the present value of the earnings for the individual exposed to the risk."

5. Why might willingness-to-pay measures based on surveys overstate respondents' true willingngess-to-pay?

6. Should the benefits of smoking to smokers be considered in cost benefit analyses of policies to reduce the smoking rate?

7. Suppose you were estimating willingness-to-pay for contraceptives using a continguent valuation survey. Propose a question or approach to assessing the validity of willingness-to-pay estimates.