Deck 7: Benefit-Cost Analysis: Benefits

Question 1

Contingent valuation is

A)a type of revealed preference
B)a direct method of estimating damages
C)a survey approach asking consumers to answer questions regarding their willingness to pay
D)all of the above

Answer 1

C

Question 2

The practice of estimating willingness to accept

A)asks how much compensation people require for a reduction in environmental quality
B)asks how much respondents are willing to pay for a reduction in environmental quality
C)is constrained by a respondents' ability to pay
D)is typically equivalent to a respondent's willingness to pay

Answer 2

A

Question 3

Health states and health indices are often 'monetized,' which means

A)the value is stated in dollars so that it can be compared with the cost of pollution control
B)the value is stated in dollars so that people understand the sacrifice to produce an increase
C)the value is stated in terms of the resources required to produce an increase
D)the value is stated in terms of the amount that people are willing to pay for increases

Answer 3

A

Question 4

The amount that a person would accept in order to be compensated for a small loss in air quality is called his/her ________.

A)willingness to pay
B)willingness to accept
C)consumer surplus
D)change in consumer surplus

Question 5

Valuing children's health through willingness to pay methods is complicated because

A)children may be more impacted by environmental pollution than adults
B)children are not capable of offering WTP information on their health
C)some adults have been found to value the health of their children more than their own
D)all of the above

Question 6

Option value refers to

A)valuing the option of being able to experience an environmental asset in the future
B)valuing the ability to trade an environmental asset in the stock market
C)the value assigned to different environmental alternatives
D)the value people place on having the option to vote on environmental policy

Question 7

Preventative expenditures, hedonic estimation, surrogate markets and contingent valuation are all examples of ________.

A)indirect approaches of cost estimation
B)indirect approaches of benefit estimation
C)direct approaches of cost estimation
D)direct approaches of benefit estimation

Question 8

Air pollution causes materials damages to exposed surfaces.Which of the following is not considered when estimating materials damage values?

A)dose response relationships
B)maintenance costs
C)early replacement costs
D)all of the above are potential costs when estimating materials damages

Question 9

Some of the costs that are not measured when employing direct damage measures from pollution are

A)averting costs
B)maintenance costs
C)increased medical expenditures
D)lost productivity

Question 10

Estimating the value of environmental quality through housing prices may be more accurate than industrial wage studies because

A)housing prices are more accurately recorded than wage data
B)wage prices are more regulated than housing prices
C)industrial wage studies estimate the value of health benefits, but not the aesthetic impacts of environmental quality
D)people own homes for a longer period than their working lives

Question 11

It is possible to estimate ________ by considering information about reductions in worker productivity and medical expenditures.

A)demand for health care
B)health damages
C)output losses
D)willingness to pay for hospitals

Question 12

The goal of a contingent value questionnaire when valuing an environmental amenity is

A)to elicit respondents to reveal whether they would be willing to pay rather than go without the amenity
B)to elicit respondents to reveal the average amount they would be willing to pay rather than go without the amenity
C)to elicit respondents to reveal the maximum amount they would be willing to pay rather than go without the amenity
D)to elicit respondents to reveal the minimum amount they would be willing to pay rather than go without the amenity

Question 13

When estimating the benefits of improved environmental quality, the practice of discounting

A)decreases the relative value of programs that yield immediate benefits
B)decreases the relative value of programs that produce benefits far into the future
C)should be rejected, due to uncertainty of the discount rate
D)all of the above

Question 14

There are two types of contingent valuation estimates that are practiced:

A)valuing environmental amenities and valuing health outcomes
B)valuing protective regulation and valuing protective sanctions
C)valuing time preferences and estimating risk aversion
D)identifying respondent groups and estimating sampling procedures

Question 15

Peoples' willingness to pay for environmental quality and amenities that they may never experience is called nonuse value.All of the following are explanations of nonuse value except:

A)experience value
B)option value
C)stewardship value
D)existence value

Question 16

Averting costs are

A)a type of revealed preference
B)purchased market goods that affect a consumer's exposure to the ambient environment
C)one way to estimate willingness to pay
D)all of the above

Question 17

Suppose public authorities were contemplating locating a hazardous waste incinerator in a particular community.If the members of this community offered to pay $25,000 to keep it out of their area, this amount is equal to their ________ for clean air.

A)willingness to accept
B)willingness to pay
C)use value
D)consumer surplus

Question 18

Changes in productivity, health-care costs, loss of human capital and replacement/restoration of damaged property or businesses are all examples of ________.

A)indirect approaches of cost estimation
B)indirect approaches of benefit estimation
C)direct approaches of cost estimation
D)direct approaches of benefit estimation

Question 19

The cost of illness approach measures ____________, in order to estimate the benefits of pollution control in terms of reduced health related costs.

A)direct medical related expenses only
B)both direct and indirect costs of illness
C)only indirect expenses associated with illness
D)increases in quality of life

Question 20

All of the following are examples of revealed preference methods that have been used to estimate the value of environmental quality except

A)travel costs
B)intercity wage differentials
C)contingent valuation
D)housing costs

Question 21

In surveys and experimental work where people are asked to compare gains and losses relative to a reference point

A)they place a higher value on losses from this reference point than gains
B)they place a lower value on losses from this reference point than gains
C)they place an equal value on losses from this reference point than gains
D)they are inconsistent with regard to whether gains or losses have a higher value

Question 22

_________ determine the specific relationship between ambient pollution exposure and adverse health effects.

A)Environmental economists
B)Surveys
C)Epidemiologists
D)Diffusion models

Question 23

Answers to willingness to accept questions are typically

A)greater than their willingness to pay responses for the same item
B)equal to their willingness to pay responses for the same item
C)less than their willingness to pay responses for the same item
D)have no direct relationship to their willingness to pay responses for the same item

Question 24

Suppose that the average person in a group of 150,000 people is willing to pay $10 to lower the probability of a random death among members of that group from 10 in 150,000 to 9 in 150,000.Then the total willingness to pay is $10 (150,000) = $1,500,000 is equal to

A)the willingness to accept an additional death in the group, based on willingness to pay
B)the value of a statistical life, based on willingness to pay
C)the value that each individual places on their own life, based on willingness to pay
D)the average lifetime earned wage rate of members in the group