What is relative internal weight on underprivileged group

Reference no: EM13213167

A public project has the following costs and benefits (in real dollars): Assume that 6% is the appropriate discount rate and that all costs and benefits displace only consumption.

a) What is the net present value (NPV) of the project? Does the project satisfy the Kaldor-Hicks criterion? (You Could show division of Year 0 cost by 1.06= 1 if desired)

b) Suppose that all benefits are received by a "privileged" group in society (e.g., those with annual incomes above $100,000) and all costs are paid by an "underprivileged" group. What is the relative internal weight on the underprivileged group? Should the policy be enacted if the "true" social weight is greater or less than the internal weight? Explain.

c) Suppose instead that 50% of the initial (Year 0) costs displace private investment and the shadow price of capital (SPC) is 1.25. Ignoring distributional issues and using the SPC method, what is the NPV of the project?

Reference no: EM13213167

Questions Cloud

Does the project satisfy the kaldor-hicks criterion : What is the net present value of the project? Does the project satisfy the Kaldor-Hicks criterion and what is the relative internal weight on the underprivileged group

Explain what is the final temperature of spoon coffee : What is the final temperature of spoon + coffee? (Assume that the heat capacity of the spoon is the same as that of pure iron and that the heat capacity of the coffee is the same as that of pure water.)

Explain how many joules of energy are absorbed by the water : How many joules of energy are absorbed by the silver? How many joules of energy are absorbed by the water?

Explain what is the minimum mass of lioh required : The CO2 output of an astronaut is about 1.3 kg/day. What is the minimum mass of LiOH required for a six-day space shuttle flight involving five astronauts?

What is relative internal weight on underprivileged group : What is the net present value (NPV) of the project? Does the project satisfy the Kaldor-Hicks criterion and what is the relative internal weight on the underprivileged group? Should the policy be enacted if the "true" social weight is greater or l..

State how many red blood cells are there in an average adult : The volume of blood in a typical adult is about 4.7 L. How many red blood cells are there in an average adult?

Evaluate the net present value : Calculate the net present value assuming that the benefits are realized at the end of each of the three years - Departmental regulations require use of a real discount rate of 4 percent.

By how much will aggregate demand at current prices shift : Suppose the consumption function is C = $400 billion + 0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with ( a ) A $50 billion increase in gov..

Discuss how managers use the elasticities measurement : Discuss the meaning of the regression coefficient of the independent variable(s) and how it could be used to estimate the elasticities of each of these variables. Discuss how managers use the elasticities measurement to make managerial decisions.

User Account

All Pages