ECON 426 Chapter 2: Chapter 2 summary

Q1. The following are examples of benefits except:

a. Additional revenue to local motels because of extended national park road.

b. School overcrowding because of a military base expansion.

c. Less tire wear because of a military base expansion.

d. $400,000 annual income to local businesses because tourism created by new national park.

Q2. To convert inflated dollars into constant-value dollars, it is necessary to take inflated

dollars and:

a. Divide by (1 + i_f)ⁿ

b.Divide by (1 + f )ⁿ

^c. Divide by (1 + i)ⁿ

d. Multiply by (1 + f)ⁿ

^{Please explain me why you chose the answer.}

27. What is the deadweight loss from the shoe subsidy? (a) G + H. (b) I + N. (c) L + M. (d) F + K.

27. What is the deadweight loss from the shoe subsidy? (a) L+M. (b) G + H. (C) F + K. (d) I + N.