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For questions 4-9 consider the following scenario and data. Air quality in Megalopolis is poor and getting worse. Heavy traffic, industrial growth, and poor geography have combined to produce frequent health warnings in the city, particularly during the summer. Violations of the ground-level ozone standard are especially frequent. During 2015, for example, there were more than 148 days in which Megalopolis exceeded the EPA's National Air Quality Standard for ground-level ozone of 70 parts per billion (ppb). Of equal concern is that ozone measurements have been as much as twice the EPA standard on violation days. On the worst days, school children are not permitted to go outside for recess, and sick and elderly individuals are strongly advised to stay inside. A recent study of air pollution by the Office of Technology Assessment has suggested measures to reduce emission of volatile organic compounds (VOCs), which would alleviate some (but not all) of the ozone problem in Megalopolis. Two strategies for reducing VOCs have been identified. You have been asked to assess the relative merit of these strategies using Cost-Benefit Analysis (CBA). To simplify the analysis, the city has asked for a study of benefits and costs for the ten-year period 2015-2024 The two VOC-reduction strategies are as follows: Policy Option l: Application of known pollution control measures at industrial sites. Initial costs are low, but costs are expected to rise over time as opportunities to apply existing pollution control measures to new situations become more costly Policy Option II: Substantial investment in research and development to foster and extend technological breakthroughs in elimination of VOCs in some products. Costs will be extremely high during the first two years, but will then fall as improved technologies become more cheaply available The city has decided to choose either Option I or Option II. Your task is to compare the two strategies. Epidemiological studies have been conducted to determine the likely benefits of VOC reductions. These benefits fall into three categories and are listed in Table 1. The annual expected costs of these strategies are listed in Table 2. Table 1. Annual benefits with a one-ton reduction in VOCs (million $per year) Category Reduction in asthma attacks Reduction in days of restricted activity Reduction in severe coughing episodes Total annual benefits Benefit/yr 200 200 100 500 Table 2. Annual costs to achieve a one-ton reduction in VOCs (million $ Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Option I 300 350 400 450 500 550 600 650 700 750 5250 Option II 1500 1500 100 100 100 100 100 100 100 100 3800