Cost benefit analysis-vat, Macroeconomics

Assignment Help:

(1) Based on the article, describe as best you can:

(i) the reference group for the cost benefit analysis,

(ii) the purpose of the study (i.e., what is the "project" in this case?), and

(iii) the estimated project life over which the project is evaluated.

Explain whether the cost benefit analysis is:

(iv) formative or summative;

(v) ex ante or ex post; and

(vi) social cost-benefit analysis or private cost-benefit analysis.

Explain or define your use of these terms and provide reasoning and evidence (if any) in support of your answers.

2. (a) Briefly describe the major categories of expected benefits and expected costs from undertaking the project, as explained by the authors.

(b) Explain how and where the value of human lives saved or lost might enter this analysis, and explain whether all of these effects are addressed in the article. If human lives are expected to be saved or lost, should some or all of the value of these be itemized separately in estimating Net Present Value, or would they already be incorporated in the measures of benefits and costs given in your answer to

Question 2(a)

3. (a) An important aspect of any cost benefit analysis is the choice of the counterfactual situation against which project benefits and gains are to be measured. Describe as clearly and succinctly as you can what you believe to be this counterfactual situation [i.e., the "without-project" case]. What is the relative increase in traffic volumes with relative increase in traffic volumes with the project as compared to the counterfactual situation?

How much larger (expressed as a multiple) is the volume of traffic using the tunnels (as projected by the authors) after 50 years compared to the first year of use?

(b) Explain clearly whether you agree with the authors' decision to treat the collected road tolls as a cost-reducing item. Support your answer with a diagram if this helps.

(c) Explain clearly whether you agree with the authors' decision to exclude the (VAT) taxes paid on the construction costs. Support your answer with a diagram if this helps.

4. (a) What discount rate do the authors use? (Specify whether it is real or nominal, and social or private.) Does it appear that the authors have calculated the Net Present Value using the so-called Harberger (SOCC) approach or the Marglin approach (STP-SPC)? Explain your answer.

(b) From the description of the project given in the article, prepare a short list of which members of society, that is, of the project reference group, would be relative winners and which would be relative losers if this project went ahead as described. [Your groups need not be mutually exclusive.]

5. (a) Explain by the use of reasoning or evidence, whether the NPV in Table 6 has been estimated using (i) the "domestic price approach," (ii) the "border price approach," or (iii) something else. If you would recommend some changes to the approach used, what would they be?

(b) In your answer to Question 1, you described the estimated project life over which the project is evaluated. What steps appear to have been taken by the author to capture any residual benefits or residual costs after this project life? What changes would you recommend to the approach used?

6. The value of land is not prominent as a cost or benefit described in the article.

(a) Suppose the government has to expropriate or purchase some land to situate the new highway routes, ramps, overpasses and so on. What conceptual approach or criterion should be used to value these lands for the purpose of this study?

(b) If acquired, should these land values be costs to the project (they would involve cash payouts); benefits to the project (the project's real estate holdings have increased); neither, or both? Explain.

7. Assume for the moment that all of the author's data-and all of the numerical calculations that employ the data-were correct and the best available for the 2010 study.

In your view-calculations aside-what are other major potential sources of inaccuracy, omission, or error which might make the net benefits of the project evaluated in this article be much higher or lower than estimated there? List three or four which might work in each direction. (Your answer may repeat some of the issues raised in other questions).


Related Discussions:- Cost benefit analysis-vat

Difference between project proposal and project feasibility , Project feasi...

Project feasibility study is needed to make a decision whether the project proposal is technically and economically possible. After finalization of the project feasibility report b

U.s. department of agriculture, The U.S. Department of Agriculture, nass.us...

The U.S. Department of Agriculture, nass.usda.gov, publishes charts on the prices of farm products. Go to the USDA home page and select Charts and Maps and then Agricultural Prices

Interdependence of macroeconomics and microeconomics , INTERDEPENDENCE OF M...

INTERDEPENDENCE OF MACROECONOMICS AND MICROECONOMICS In microeconomics, the underlying assumption is that the total output, total employment and total spending are given. It th

What are the international economic crisis, What are the international econ...

What are the international economic crisis A current account surplus can only take place in one nation if there is a current account shortage in another country. So it makes no

Economic performance, This 24 year 1 quarter period should offer sufficient...

This 24 year 1 quarter period should offer sufficient insight into the short term and long term correlation between the variables. Figure - A graph showing the trend of

Manufactures artificial trees and flowers, Face Tree manufactures artificia...

Face Tree manufactures artificial trees and flowers. There are about 100 workers who do the routine assembly work for pay ranging from $8 per hour to $15 per hour. They work in two

Define the term- inflation, Define the term- inflation Inflation betwee...

Define the term- inflation Inflation between two points in time is defined as the percentage increase of price index between these two points in time.

Problem with the keynesian model, The problem with the Keynesian model ...

The problem with the Keynesian model We can classify two problems with the Keynesian model as developed so far: 1. Π is exogenous. Although inflation may temporarily deviate

Demand for money and gdp, Q. Demand for money and GDP? The demand for m...

Q. Demand for money and GDP? The demand for money also relies on the GDP as GDP is closely associated to national income. If you choose to hold a fixed proportion of your wealt

Various control variables in the data set, From stock and Watson 3rd editio...

From stock and Watson 3rd edition introduction to econometrics Using the data set Teaching Ratings described, carry out the following exercises. a) Run a regression of Course

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd