Problem Set 5 - ECON 436.pdf

# C suppose these individuals would receive the same

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C. Suppose these individuals would receive the same amount of utility from an environmental improvement. If the willingness to pay of the " rich" person was \$16 , 000 , how much would the "poor" person be willing to pay? IV. According to the Porter hypothesis , reducing pollution by imposing a tax on pollution might actually make polluters better off. Use a diagram to explain why this might occur if polluters are unaware of profit-increasing innovations in abatement technology . v. Suppose that the government is considering doing some or all of seven policies that would reduce mortality risks from pollution . The table below shows the data necessary to calculate the cost effectiveness of each policy. A. Complete the calculations in the table . You do not have to hand in the completed table, but do write down the policies in order of decreasing cost effectiveness \ together with the cost per life saved for each one . (Note : the lower the cost per life saved , the higher the cost effectiveness.)

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Reduction Expected Cost per Annual Exposed in Mortality Annual Life Cost Population Risk Lives Saved Policy (\$millions) (millions) (per million) Saved (millions) A 25.0 50 2.5 B 25.5 17 3.0 C 259.0 2 3.5 D 365.5 86 0.5 E 1,596.0 190 4.0 F 1,650.0 150 2.5 G 2,013.0 122 1.0 B. Suppose that it is proposed to implement only policies F and G. 1. How many total lives would these two policies save? 2. What is the greatest total number of lives that could be saved , at a total cost no greater than the total cost of F and G, if the most cost-effective policies were chosen? C. Suppose you learn that the government has decided to implement only the four most cost-effective policies. What could you infer about the implicit value of a statistical life being used by the government?
• Fall '08
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• Pollution, Hazardous waste

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