Question

1. A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. Thus, the visual appearance would For the students of the college, the visual appearance of the campus is (non-rival/rival) and (non-excludable/excludable). Thus, the visual appearance would be classified as a public good.2. Suppose the college administrators estimate that the beautification initiative will cost $4,400. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 300 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $11.3. The benefit of the beatification initiative, as suggested by the survey, is $_____. Because the estimated benefit is (less/greater) than the cost, the college administrators (should/should not) undertake the beautification initiative.4. 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? A) An equal number of male and female students were surveyed.B) Students believe that if the initiative does not happen, the funds for the initiative will not be spent. elsewhere.

Answer 1

Answer:

For the students of the college, the visual appearance of the campus is non-rival and non-excludable

The benefit of the beatification initiative, as suggested by the survey, is $3,390. Because the estimated benefit is less than the cost, the college administrators should not undertake the beautification initiative.

Explanation:

non-rival and non-excludable

This means that everyone benefits from the remodel equally and people who do not pay for it will still enjoy their benefits.

$3,390

The benefit is found by multiplying the average benefit for each person surveyed by the number of people surveyed, which is $11.3 X 300 = $3,390.

The college should not complete the project because the marginal cost: $4,400 is more than the marginal benefit: $3,390.