Question

A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. Thus, the visual appearance would For the students of the college, the visual appearance of the campus is (non-rival/rival) and (non-excludable/excludable). Thus, the visual appearance would be classified as a public good.Suppose the college administrators estimate that the beautification initiative will cost $4,400. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 300 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $11.The benefit of the beatification initiative, as suggested by the survey, is $_____. Because the estimated benefit is (less/greater) than the cost, the college administrators (should/should not) undertake the beautification initiative.

Answer 1

Since the average benefit is $11, and 300 students were sampled, The estimated benefits for the project is $11 ×300 = $3300. The estimated cost is $4400.

Therefore estimated benefit is less than the cost, the project should not be undertaken.