ECP3302_Answers_Exam2.pdf - ECP 3302 INTRODUCTION TO...

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ECP 3302: INTRODUCTION TO ENVIRONMENTAL ECONOMICS Exam 2 (Total 100 Points) Section A: 20 Points (fill out the blanks with appropriate word/words based on your readings from the textbook, each question is worth of 2 points). 1. The EPA is required to perform benefit-cost studies known as Regulatory Impact Analyses on any regulation expected to cost $100 million or more. 2. The four requirements for a “good” benefit-cost study are: 1) 2) follow accepted procedures for estimating benefits and costs 3) provide a clear statement of all assumptions 4) point out uncerainties where they exist suggest realistic margins of error 3. A benefit-cost ration greater than 1 means total benefits exceed total costs; a benefit- cost ration less than 1 means total costs exceed total benefits. However, benefit-cost ratios tell us nothing about whether a proposed policy is efficient . 4. Taxing solid waste disposal now and setting aside the generated funds to build new water supplies later, should contamination develop, is an example of an environmental bond . 5. The four main drawbacks to benefit-cost analysis are: 1) 2) regulatory politics 3) corporate control of the scientific agenda 4) the hard numbers problem paralysis by analysis 6. The Bandwagon
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