In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government-used a 5% social discount rate. If it had instead used a 7% social discount rate, the net present value of the policy would have been; if it had used a 10% social discount rate, the net present value would have been Select one:

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.11P
icon
Related questions
Question
In a recent benefit-cost analysis of a proposed regulation that generated positive net
benefits in the present but negative net benefits in the future, the government-used a
5% social discount rate. If it had instead used a 7% social discount rate, the net
present value of the policy would have been ; if it had used a 10% social
discount rate, the net present value would have been
Select one:
a. higher; lower.
b. lower; higher.
c. somewhat lower; much lower.
d. much higher; somewhat higher.
e. somewhat higher; much higher.
f.
much lower; somewhat lower.
Transcribed Image Text:In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government-used a 5% social discount rate. If it had instead used a 7% social discount rate, the net present value of the policy would have been ; if it had used a 10% social discount rate, the net present value would have been Select one: a. higher; lower. b. lower; higher. c. somewhat lower; much lower. d. much higher; somewhat higher. e. somewhat higher; much higher. f. much lower; somewhat lower.
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Benefit Cost Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning