Suppose the administration of a University that is located a high-crime urban area must decide on a policy to increase policing on its campus. The student population is 10,500 students but is could increase if crime is reduced. The cost of added policing in terms of additional salary and equipment is estimated to be $2.4 million per year. Suppose the administration plans to make their decision with the help of a benefit cost analysis of the policy. VSL is $11.8 million a. Explain how the concept of Value of a Statistical Life might factor into a benefit cost analysis of this policy. b. How many lives would need to be save to justify the added policing costs if only prevented deaths were considered as the policy benefit? c. Suppose it is believed that student enrollment will increase in the future if crime on campus is reduced. Write a formula to calculate the present value of benefits of policing if student enrollment increases by 4% each year.

Suppose the administration of a University that is located a high-crime urban area must decide on a policy to increase policing on its campus. The student population is 10,500 students but is could increase if crime is reduced. The cost of added policing in terms of additional salary and equipment is estimated to be $2.4 million per year. Suppose the administration plans to make their decision with the help of a benefit cost analysis of the policy. VSL is $11.8 million a. Explain how the concept of Value of a Statistical Life might factor into a benefit cost analysis of this policy. b. How many lives would need to be save to justify the added policing costs if only prevented deaths were considered as the policy benefit? c. Suppose it is believed that student enrollment will increase in the future if crime on campus is reduced. Write a formula to calculate the present value of benefits of policing if student enrollment increases by 4% each year.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.8P

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