The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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