Question

20.If the discount rate is r and t represents time, the discount factor, f, is equal to ________.

A.f = 1/(1+r)

B.f = 1/(1+r)t

C.f = 1/rt

D.f = r

22.Suppose a manufacturing firm that is about to be regulated faces the following actual and potential production costs: 1) $200 before regulation; 2) $225 in the future without the regulation; and 3) $240 in the future with the regulation. The true cost of the proposed regulation is $40.

A.True

B.False

24.When environmental regulation of an entire industry results in output adjustments, the social cost of the regulation can be measured by the change in consumer surplus.

A.True

B.False

25.Using the increase in abatement expenditures as a measure of the social opportunity cost of regulating an entire industry is not accurate because market adjustments are likely to alter the role and performance of the industry in the wider economy.

A.True

B.False

Answer 1

20)

If r is the interest rate and t is the time period than discount rate is

1/(1+r)^(t)

22)

Since cost of future without regulation is $225 and cost of future with regulation is $240

So actual cost is $15 and not $40. so it is false

24)

Social Cost due to environmental regulation is measured by both producer and consumer surplus and hence it's false

25)

True , an entire industry goes through other changes and supply demand dynamics to adjust to regulations