Question 1

One of major drawbacks of the benefit-cost ratios is

Accepted Answer

A) They are difficult to calculate. 
B) Social benefits are not well defined. 
C) Social costs are not well defined. 
D) Ambiguity associated with a project's disbenefits. 
E) Private benefits are not well defined. 
A) They are difficult to calculate. 
B) Social benefits are not well defined. 
C) Social costs are not well defined. 
D) Ambiguity associated with a project's disbenefits. 
E) Private benefits are not well defined.

Question 2

The provincial department of transportation is considering investing in a provincial highway. Five mutually exclusive alternatives were identified. The present worths of their expected costs and benefits were calculated, and the data are summarized in the following table:
   Calculate the BCR for each alternative, the incremental BCR and identify the best alternative.

Accepted Answer

By definition, BCR = @#IMG-DLM& and therefore, the

Question 3

"Although it goes without saying that all relevant costs and benefits must be taken into account, the number of potential mistakes in applying the principle [of Account Comprehensively for Benefits and Costs] is surprisingly large. In the transit domain, for example, studies ... fail to assign economic value to ________." (HLB Decision Economics Inc., 2004).

Accepted Answer

A) operating costs 
B) reduction in risk of traffic accidents 
C) revenues collected 
D) capital costs 
E) taxes paid 
A) operating costs 
B) reduction in risk of traffic accidents 
C) revenues collected 
D) capital costs 
E) taxes paid

Question 4

The point of view used in Benefit-Cost Analysis is associated with

Accepted Answer

A) market participants. 
B) social groups. 
C) shareholders of a business. 
D) the government. 
E) consumers of a good or service. 
A) market participants. 
B) social groups. 
C) shareholders of a business. 
D) the government. 
E) consumers of a good or service.

Question 5

Engineering decisions associated with public projects should be based on

Accepted Answer

A) market costs and benefits. 
B) environmental costs and benefits. 
C) marginal willingness to pay. 
D) marginal costs and benefits. 
E) social costs and benefits. 
A) market costs and benefits. 
B) environmental costs and benefits. 
C) marginal willingness to pay. 
D) marginal costs and benefits. 
E) social costs and benefits.

Question 6

Which of the following effects should not be considered in BCA?

Accepted Answer

A) direct benefits of the project 
B) changes in opportunities as a result of the project 
C) changes in income distribution 
D) changes in supply and demand 
E) changes in taxation 
A) direct benefits of the project 
B) changes in opportunities as a result of the project 
C) changes in income distribution 
D) changes in supply and demand 
E) changes in taxation

Question 7

A provincial government in a small city is considering a project of the city dump-site. Three alternative sites were identified with the following economic characteristics:
   Each site is expected to provide services valued at $3 million per year. Assume a 100-year study period, a 5% discount rate and a 10% sale value of the site after 100 years. Rank these sites in terms of their BCRs.

Accepted Answer

The value of a site is its opportunity c

Question 8

There are four mutually exclusive alternatives to build a rural road. Present worth of social benefits and costs as well as benefit-cost ratios are presented in the following table:   Based on this information, what alternative should be chosen?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) None 
A) A 
B) B 
C) C 
D) D 
E) None

Question 9

Suppose than a public project has the following profile:
   Assuming a social discount rate of 5%, calculate the project's BCR.

Accepted Answer

The present worth of the costs and benef

Question 10

What is contingent valuation?

Accepted Answer

A) assigning a value to an intangible good based on the results of surveys 
B) assigning a value to an intangible good based on how much people will pay to obtain it 
C) assigning a value to an intangible good based on its historical price 
D) assigning a value to an intangible good based on its price in an ideal free market 
E) assigning a value to an intangible good based on what it would cost to provide a substitute for it 
A) assigning a value to an intangible good based on the results of surveys 
B) assigning a value to an intangible good based on how much people will pay to obtain it 
C) assigning a value to an intangible good based on its historical price 
D) assigning a value to an intangible good based on its price in an ideal free market 
E) assigning a value to an intangible good based on what it would cost to provide a substitute for it

Question 11

A 10-year public project that required $1.5 million generates annual revenue of $0.2 million beginning from year 1. What is the project's rate of return on its investment?

Accepted Answer

A) 5.6% 
B) 6.6% 
C) 7.6% 
D) 8.6% 
E) 9.6% 
A) 5.6% 
B) 6.6% 
C) 7.6% 
D) 8.6% 
E) 9.6%

Question 12

A provincial program is subsidizing programs for alternative energy usage. Suppose there are two programs to consider: (i)a system that uses solar energy, and (ii)a system that uses wind energy. Each system lasts 25 years and has the same expected benefits. Economic data on both systems are presented below:
   If the MARR is 5%, which system is preferred from the viewpoint of a private producer and from the viewpoint of a public decision-making?

Accepted Answer

Since benefits are the same, let us calc

Question 13

A city council is planning to build a new bridge across a creek. This will require an immediate expenditure of $50 000, and an estimated $2 000 a year in maintenance, but will save citizens an estimated $5 000 in travel costs every year over the next twenty years. If the council's MARR is 5%, what is the BCRM for the project?

Accepted Answer

A) 0.75 
B) 0.83 
C) 1.25 
D) 1.34 
E) 2.00 
A) 0.75 
B) 0.83 
C) 1.25 
D) 1.34 
E) 2.00

Question 14

One of the following is a fundamental difference between financial analysis and BCA. Which one?

Accepted Answer

A) Inflation is not included in BCA. 
B) Tax effects are not included in BCA. 
C) Time value of money is not reflected in BCA. 
D) Operating costs are not included in BCA. 
E) Capital costs are not included in BCA. 
A) Inflation is not included in BCA. 
B) Tax effects are not included in BCA. 
C) Time value of money is not reflected in BCA. 
D) Operating costs are not included in BCA. 
E) Capital costs are not included in BCA.

Question 15

A government and a large corporation might each consider building a nuclear reactor to provide power to a city. What similarities and differences might there be in how they evaluated the project?

Accepted Answer

The corporation is responsible to its sh

Question 16

How should market failures be addressed?

Accepted Answer

A) through the establishment of barriers to enter the market 
B) through the replacement of social equilibrium by market equilibrium 
C) through free market interactions between consumers and producers 
D) through government intervention and the courts 
E) through market deregulations 
A) through the establishment of barriers to enter the market 
B) through the replacement of social equilibrium by market equilibrium 
C) through free market interactions between consumers and producers 
D) through government intervention and the courts 
E) through market deregulations

Question 17

When a community puts pressure on a municipal government to preserve the municipal park, this is an example of

Accepted Answer

A) regulation. 
B) command and control policies. 
C) monetary incentives. 
D) litigation. 
E) informal methods. 
A) regulation. 
B) command and control policies. 
C) monetary incentives. 
D) litigation. 
E) informal methods.

Question 18

What are the fundamental differences between financial analysis and social benefit-cost analysis?

Accepted Answer

There are four basic differences between

Question 19

All of the following EXCEPT one are reasons for monopolies to be regulated. Which is the exception?

Accepted Answer

A) Monopolies are guaranteed to make economic profits in the long run. 
B) Monopolies are inefficient. 
C) The existence of monopolies may lead to a more unequal distribution of benefits. 
D) Monopolists produce below efficient level of production. 
E) Monopolies charge excessive prices. 
A) Monopolies are guaranteed to make economic profits in the long run. 
B) Monopolies are inefficient. 
C) The existence of monopolies may lead to a more unequal distribution of benefits. 
D) Monopolists produce below efficient level of production. 
E) Monopolies charge excessive prices.

Question 20

Which of the following is an example of an intangible benefit?

Accepted Answer

A) improved technology 
B) improved custom service 
C) improved quality of a good 
D) improved safety 
E) improved design 
A) improved technology 
B) improved custom service 
C) improved quality of a good 
D) improved safety 
E) improved design

One of major drawbacks of the benefit-cost ratios is

The point of view used in Benefit-Cost Analysis is associated with

Engineering decisions associated with public projects should be based on

Which of the following effects should not be considered in BCA?

There are four mutually exclusive alternatives to build a rural road. Present worth of social benefits and costs as well as benefit-cost ratios are presented in the following table: Based on this information, what alternative should be chosen?

Suppose than a public project has the following profile: Assuming a social discount rate of 5%, calculate the project's BCR.

What is contingent valuation?

A 10-year public project that required $1.5 million generates annual revenue of $0.2 million beginning from year 1. What is the project's rate of return on its investment?

One of the following is a fundamental difference between financial analysis and BCA. Which one?

A government and a large corporation might each consider building a nuclear reactor to provide power to a city. What similarities and differences might there be in how they evaluated the project?

How should market failures be addressed?

When a community puts pressure on a municipal government to preserve the municipal park, this is an example of

What are the fundamental differences between financial analysis and social benefit-cost analysis?

All of the following EXCEPT one are reasons for monopolies to be regulated. Which is the exception?

Which of the following is an example of an intangible benefit?

Engineering Decision Making

Time Value of Money

Cash Flow Analysis

Comparison Methods: Part I

Comparison Methods: Part Ii

Financial Accounting and Business Plans

Replacement Decisions

Taxes

Inflation

Project Management

Dealing With Uncertainty and Risk

Filters

Exam 10: Public Sector Decision Making

One of major drawbacks of the benefit-cost ratios is

The point of view used in Benefit-Cost Analysis is associated with

Engineering decisions associated with public projects should be based on

Which of the following effects should not be considered in BCA?

There are four mutually exclusive alternatives to build a rural road. Present worth of social benefits and costs as well as benefit-cost ratios are presented in the following table: Based on this information, what alternative should be chosen?

Suppose than a public project has the following profile: Assuming a social discount rate of 5%, calculate the project's BCR.

What is contingent valuation?

A 10-year public project that required $1.5 million generates annual revenue of $0.2 million beginning from year 1. What is the project's rate of return on its investment?

One of the following is a fundamental difference between financial analysis and BCA. Which one?

A government and a large corporation might each consider building a nuclear reactor to provide power to a city. What similarities and differences might there be in how they evaluated the project?

How should market failures be addressed?

When a community puts pressure on a municipal government to preserve the municipal park, this is an example of

What are the fundamental differences between financial analysis and social benefit-cost analysis?

All of the following EXCEPT one are reasons for monopolies to be regulated. Which is the exception?

Which of the following is an example of an intangible benefit?

Engineering Decision Making

Time Value of Money

Cash Flow Analysis

Comparison Methods: Part I

Comparison Methods: Part Ii

Financial Accounting and Business Plans

Replacement Decisions

Taxes

Inflation

Project Management

Dealing With Uncertainty and Risk

Filters