9. A proposed, new four-year government program is expected to provide society the following annual benefits over three years, after an initial year of program set-up (start-date is set for January 1, 2020): Total Social Benefits (nominal dollars) 2020: None (set-up year) 2021: $3.5 million 2022: $4 million 2023: $4.5 million Assume that the annual interest rate over the life of the program will be stable at 2%. Adapting the formula presented in our Cooter & Ulen reading, what is the "present discounted value" of the program at the start date? [Note: for ease of calculation, assume the annual social benefit is tallied and provided all at once on December 31 st of each year.] 10. Consider the following hypothetical scenario: a new national security "Password Shield" program operated by the government changes how the Internet's "backbone" functions, making it more difficult for hackers to steal passwords from anyone. Opponents acknowledge the benefit to consumers but argue that people having an increased sense of safety will end up sharing passwords with friends and associates more frequently, ironically increasing some of the very risks the Password Shield program is intended to reduce. The term these opponents are using to describe this risk is "moral hazard." Is their application of that term appropriate? Why or why not? 11. Critique the following: "The graph below shows why economics is dangerous for the planet. It suggests that the level of pollution reduction P*, where its marginal cost is just equal to its marginal benefit to society, is preferable to a 100% reduction in pollution (i.e., total elimination of all pollution). But that's absurd. Everyone knows there's no 'efficient' level of pollution, and that getting rid of all pollution is better for everyone than letting some pollution continue Marginal cost of pollution reduction MC Marginal benefit MC = MB of pollution reduction MB P+ 100%% Reduction in pollution unabated."