Comment: "The calculation of net benefits from the park is too high, because it ignores the fact that the land could have been used in...
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Please help me with question 2.

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d. Comment: &quot;The calculation of net benefits from the park is too high, because it ignores the fact that the land could have been
used in agricultural production. This is the opportunity cost of the land used for the park&quot; (1 pt)
Possible Responses (check the box that is the best response):
O &quot;We have properly accounted for the opportunity cost of the land used for the park. The price of the land reflects the value
of the land in its next best alternative&quot;.
&quot;You're right, we should measure and account for this effect in our analysis.&quot;
2. Suppose a small hydro dam is planned for the Trinity River in northern California. Up front construction costs (initial costs in year ()
are $20 million. After that (beginning in year 1), electricity benefits of $2 million/yr, and operating costs of $0.2 million/yr, are
expected into perpetuity (the dam is very durable). Also, construction of the dam implies the loss of wilderness and recreation values
known to be $1 million/yr, (starting in year 1) into perpetuity. At what interest rate are we - as economists - indifferent between
constructing the dam and leaving the river wild? In other words, at what interest rate does the conclusion of the CBA for the dam flip
from &quot;Don't build the dam&quot; to &quot;Build the dam&quot;? (You see, I hope, the effect of the discount rate in economic analysis). Clearly show
your work. Highlight (or box) your answers. (5 pit.).

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