Question 1

Deflating refers to the process of converting a real value into its nominal value.

Accepted Answer

A) True 
 B)False  False

Question 2

The term, 1/(1 + r)t is known as the discount rate, where r represents the discount factor.

Accepted Answer

A) True 
 B)False  False

Question 3

The first U.S. president to explicitly include the efficiency criterion in the regulatory review process was President Clinton.

Accepted Answer

A) True 
 B)False  False

Question 4

To achieve cost-effectiveness among options that satisfy the benefit objective

Accepted Answer

A)  both PVB and PVC must be minimized 
B)  PVB must be minimized and PVC must be maximized 
C)  PVC must be minimized 
D)  none of the above 
A)  both PVB and PVC must be minimized 
B)  PVB must be minimized and PVC must be maximized 
C)  PVC must be minimized 
D)  none of the above

Question 5

If the real value of an environmental cost in 2011 is $2,500, its nominal value in 2010, assuming a 2 percent inflation rate, must have been $2,550.

Accepted Answer

A) True 
 B)False

Question 6

To achieve allocative efficiency, the present value of net benefits (PVNB) must be minimized.

Accepted Answer

A) True 
 B)False

Question 7

If, for a given policy option, PVNB equals $1,200, and PVC equals $800, then

Accepted Answer

A)  the policy option is not feasible because the value of PVB is $400 
B)  the ratio, PVB/PVC, equals 1.5 
C)  the policy option is feasible because (PVB - PV
C)  is greater than unity 
D)  there is insufficient information to determine if the policy option is feasible 
A)  the policy option is not feasible because the value of PVB is $400 
B)  the ratio, PVB/PVC, equals 1.5 
C)  the policy option is feasible because (PVB - PV
C)  is greater than unity 
D)  there is insufficient information to determine if the policy option is feasible

Question 8

Among the chief concerns about the use of benefit-cost analysis is that

Accepted Answer

A)  monetizing the benefits of a policy proposal is difficult 
B)  identifying and estimating implicit costs is a major challenge 
C)  equity might not be achieved if, for example, costs are distributed unevenly 
D)  all of the above 
E)  none of the above 
A)  monetizing the benefits of a policy proposal is difficult 
B)  identifying and estimating implicit costs is a major challenge 
C)  equity might not be achieved if, for example, costs are distributed unevenly 
D)  all of the above 
E)  none of the above

Question 9

Who was the first U.S. president to explicitly refer to the efficiency criterion as part of the regulatory review process?

Accepted Answer

A)  President Clinton 
B)  President George W. Bush 
C)  President Reagan 
D)  President Obama 
A)  President Clinton 
B)  President George W. Bush 
C)  President Reagan 
D)  President Obama

Question 10

For a given policy option, if the ratio of the present value of benefits (PVB) to the present value of costs (PVC) is greater than zero, that policy option is considered to be feasible.

Accepted Answer

A) True 
 B)False

Question 11

If (PVB/PVC) for a given policy option equals 5.5, this means that

Accepted Answer

A)  the policy option is not feasible 
B)  for every dollar of incremental costs incurred by society, there are $5.50 in realized incremental benefits 
C)  the policy option is feasible 
D)  both (b) and (c) are correct 
A)  the policy option is not feasible 
B)  for every dollar of incremental costs incurred by society, there are $5.50 in realized incremental benefits 
C)  the policy option is feasible 
D)  both (b) and (c) are correct

Question 12

President Reagan was the only U.S. president to support the use of economic criteria in policy decision making.

Accepted Answer

A) True 
 B)False

Question 13

In a benefit-cost analysis, the determination of feasibility

Accepted Answer

A)  can be made by finding out if PVB/PVC is greater than unity 
B)  is not critical and therefore is an optional step 
C)  can be accomplished by finding out if PVNB is greater than zero 
D)  all of the above 
E)  (a) and (c) only 
A)  can be made by finding out if PVB/PVC is greater than unity 
B)  is not critical and therefore is an optional step 
C)  can be accomplished by finding out if PVNB is greater than zero 
D)  all of the above 
E)  (a) and (c) only

Question 14

The future value (FV) of a dollar is its present value (PV) plus the opportunity cost of not using that dollar in the present period.

Accepted Answer

A) True 
 B)False

Question 15

In the final phase of benefit-cost analysis, one of the steps that is generally conducted is

Accepted Answer

A)  to compare time-adjusted benefits to zero 
B)  to compare time-adjusted costs to unity 
C)  to determine if PVB and PVC are inversely related 
D)  to determine if an option is feasible 
A)  to compare time-adjusted benefits to zero 
B)  to compare time-adjusted costs to unity 
C)  to determine if PVB and PVC are inversely related 
D)  to determine if an option is feasible

Question 16

Selecting the social discount rate is among the issues debated in the use of benefit-cost analysis for public policy evaluation.

Accepted Answer

A) True 
 B)False

Question 17

Achieving cost-effectiveness means that the present value of costs (PVC) is minimized for some pre-established benefit goal.

Accepted Answer

A) True 
 B)False

Question 18

In order for a policy option to achieve allocative efficiency,

Accepted Answer

A)  PVNB must be maximized 
B)  PVB must be minimized 
C)  PVC must be minimized 
D)  (PVB - PV
C)  must be minimized 
A)  PVNB must be maximized 
B)  PVB must be minimized 
C)  PVC must be minimized 
D)  (PVB - PV
C)  must be minimized

Question 19

Matters of equity are explicitly integrated into the decision rules that govern benefit-cost analysis.

Accepted Answer

A) True 
 B)False

Question 20

The present value of benefits (PVB) is equal to Σ(bt/[1+rs]t), with bt = Bt/(1 + p)t.

Accepted Answer

A) True 
 B)False

Exam 9: Benefit-Cost Analysis in Environmental Decision Making

Deflating refers to the process of converting a real value into its nominal value.

The term, 1/(1 + r)t is known as the discount rate, where r represents the discount factor.

The first U.S. president to explicitly include the efficiency criterion in the regulatory review process was President Clinton.

To achieve cost-effectiveness among options that satisfy the benefit objective

If the real value of an environmental cost in 2011 is $2,500, its nominal value in 2010, assuming a 2 percent inflation rate, must have been $2,550.

To achieve allocative efficiency, the present value of net benefits (PVNB) must be minimized.

If, for a given policy option, PVNB equals $1,200, and PVC equals $800, then

Among the chief concerns about the use of benefit-cost analysis is that

Who was the first U.S. president to explicitly refer to the efficiency criterion as part of the regulatory review process?

For a given policy option, if the ratio of the present value of benefits (PVB) to the present value of costs (PVC) is greater than zero, that policy option is considered to be feasible.

If (PVB/PVC) for a given policy option equals 5.5, this means that

President Reagan was the only U.S. president to support the use of economic criteria in policy decision making.

In a benefit-cost analysis, the determination of feasibility

The future value (FV) of a dollar is its present value (PV) plus the opportunity cost of not using that dollar in the present period.

In the final phase of benefit-cost analysis, one of the steps that is generally conducted is

Selecting the social discount rate is among the issues debated in the use of benefit-cost analysis for public policy evaluation.

Achieving cost-effectiveness means that the present value of costs (PVC) is minimized for some pre-established benefit goal.

In order for a policy option to achieve allocative efficiency,

Matters of equity are explicitly integrated into the decision rules that govern benefit-cost analysis.

The present value of benefits (PVB) is equal to Σ(bt/[1+rs]t), with bt = Bt/(1 + p)t.

The Role of Economics in Environmental Management

Modeling the Market Process: a Review of the Basics

Modeling Market Failure

Conventional Solutions to Environmental Problems: Command-And-Control Approach

Economic Solutions to Environmental Problems: the Market Approach

Environmental Risk Analysis

Assessing Benefits for Environmental Decision Making

Assessing Costs for Environmental Decision Making

Defining Air Quality: the Standard-Setting Process

Improving Air Quality: Controlling Mobile Sources

Improving Air Quality: Controlling Stationary Sources

Global Air Quality: Policies for Ozone Depletion and Climate Change

Defining Water Quality: the Standard-Setting Process

Improving Water Quality: Controlling Point and Nonpoint Sources

Protecting Safe Drinking Water

Managing Hazardous Solid Waste and Waste Sites

Managing Municipal Solid Waste

Controlling Pesticides and Toxic Chemicals

Sustainable Development: International Environmental Agreements and International Trade

Sustainable Approaches: Industrial Ecology and Pollution Prevention

Filters

The term, 1/(1 + r)^t is known as the discount rate, where r represents the discount factor.

The present value of benefits (PVB) is equal to Σ(b_t/[1+r_s]^t), with b_t= B_t/(1 + p)^t.