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Cost and Efforts of Purchasing Helmet

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Added on  2020-03-23

Cost and Efforts of Purchasing Helmet

   Added on 2020-03-23

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Assignment #1Posted by: Thursday, September 21, 2017Due date: Thursday, September 28, 2017Please provide appropriate answers to the following exercise questions. Use your knowledge and personal judgment for answering these questions. You are allowed to discuss with your classmates (or anyone you choose) regarding solutions to these problems, but your answers and your presentation should be your own. Exact presentations from two or more students, all will receive zero grades. Each question will be graded out of 10 points. The total of 50 points will be converted to 5% toward your final grade. Be adhered to the deadline as you’ll lose 10% for each day late. Your answers should:Be specific and to the point, Explicitly stateany assumption you make while answering a questionBe clear, concise but with sufficient explanationUse Excel spreadsheet wherever recommended or necessary. You may use Excel for calculation and then copy and paste into Word file.[Note: Incorporate your answer after each question and save as MSWord and submit through Blackboard. Start typing after ‘Answer:’]Questions:1.Imagine that Edmonton currently does not require bicycle riders to wear helmets. Furthermore, imagine that you enjoy riding your bicycle without wearing a helmet.a.From your perspective, what are the major costs and benefits of a proposed city by-law that would require all bicycle riders to wear helmets? List costs and benefits. (5 points)Answer: The sale of helmets would increase. Making with the economy. Less injured people in the hospitals saving the government money. Answer: The Following Cost Benefits would be usefulCosts : (Social costs as well as costs to consumers)-Inconvenience Cost of Wearing Helmets to bike riders-Cost and efforts of Purchasing Helmet and cost of modifying bike for attachment of helmet.-Costs of administration of by-law-The cost of substituting bike as a mode of transport due to by law. Consumers may avoid using a bicycle due to the inconvenience costs of wearing a helmet permanently or until they acquire a helmet. They may choose a less energy efficient mode of transport such as car. This will havesocial and economic costs. Some of the indirect costs that may accrue from this are: increased carbon footprint due to use of cars, increased demand for fossil fuel, increased burden on publictransport etc.[ CITATION Got11 \l 1033 ]Benefits: (Social benefits as well as benefits to consumers)-The reduction of risk of head injury and the reduction of possible costs to healthcare system associated with head injuries.-Building an industry around production/ sale of helmets and bikes.1 | P a g e
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b.What are the categories of costs and benefits from society’s perspective? Anything to add or to delete from the list? (5 points)Answer:The following could be the categories for social costs or benefits:-Burden on Healthcare: Will the by-law lead to significant increase in burden on healthcare system.-Costs/ Benefits to Bike and allied products industry: Will there be a net gain to bike industry or will there be a net loss. Net gain could be from additional purchases of helmets while net loss would be from reduced purchases of bikes. Additionally, net loss to society could be accrued if all these products are imported.-Burden on Public Transport: The by law may increase the revenues of public transport, if cyclists prefer public transport system by giving up on bicycles or would the burden on public transport be increased. If the commuters substitute cars for bikes, then there will be more traffic etc.-Environment: The Net Carbon Footprint of the city may increase if buses and cars are preferredover bikes.[ CITATION Asi10 \l 1033 ]2.The City of Edmonton is considering building a public swimming pool in an open park. Analysts have estimated the present values of the following effects over the expected useful life of the pool. [Create a table underneath item d. and provide answers to all questions together adding four additional columns on the right side of the table. You can do that in Excel and then copy and paste.]Provincial grantConstruction and maintenance costPersonnel costRevenue from county residentsRevenue from non-residentsUse value benefit to county residentsUse value benefit to non-residentsScrap valuePV (million dollars)2.212.58.28.62.216.63.10.8a.Assuming national level standing, what are the social net benefits of the project? ( 3 points)b.Assuming county-level standing, what are the social net benefits of the project? (3 points)c.How would a guardian in the county budget office calculate net benefit? (2 points)d.How would a spender in the county recreation department calculate benefits? (2 points)Answer:ItemValue (in CAD)Calculationa)Social Benefits at National Level8.4 million (Revenue from county residents +2 | P a g e
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Revenue from non-residents +Use value benefit to county residents +Use value benefit to non-residents +Scrap value) – Total Costsb)Social net benefits of the project-3.1 million(Revenue from county residents + Use value benefit to county residents +Scrap value)– Total Costsc)Calculation used by guardian in the county budget office Net Benefits = TotalCosts – Total Benefits (in Million dollars)Total Annual Cost (Construction and maintenance cost + Personnel cost)Revenue from county residents +Revenue from non-residents+Use value benefit to county residents+ Scrap valued) Calculation for spender in the county recreation departmentProvincial grant +Construction and maintenance cost+ Personnel costRevenue from county residents +Revenue from non-residents+Use value benefit to county residents+ Scrap valueAssumptions MadeThe provincial grant provided was extra of the costs the city. i.e Total costs – Provincial grant + Construction and maintenance cost + Personnel costBenefits of scrap value are assigned to county.Benefits at County level can be considered as a part of the aggregate benefit at national level.No effects of Taxation is present here.Net Benefits = Total Costs – Total Benefits (in Million dollars)3.Three mutually exclusive projects are being considered for a remote valley in British Columbia: Project R, a recreation facility, has estimated benefits of $10 million and costs of $8 million; project F, a forest preserve with some recreational facilities, has estimated benefits of $13 million and costs of $10 million; project W, a wilderness area with restricted public access, has estimated benefits of $5 million and costs of $1 million. In addition, a road could be built for acost of $4 million that would increase the benefits of project R by $8 million, increase the benefits of project F by $5 million, and reduce the benefits of project W by $1 million. Even in the absence of any of the other projects, the road has estimated benefits of $2 million.3 | P a g e
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