IV. 20 15 15 15 10 15 10 A. Suppose that the government is considering doing some or all of four policies that would reduce mortality risks from pollution. The table below shows the cost per statistical life saved for each of the policies. Cost per statistical life saved Policy ($millions) A _ 9.0 B _ 5.0 D 4.0 1. If the government implements only the three most cost effective policies, what does this imply about the implicit VSL used by the government? Why? 2. If the people affected by the pollution were each willing to pay $650 for a reduction in mortality risk of 0.0001, would the government's decision to implement these, and only these, three policies be correct? Why or why not? B. Suppose the specification of a wage equation is Wage = a + bRisk + cFlisk2 + variables for otherjob and personal characteristics. What would be the expected sign of the coefficient c? Why? C. Suppose that we have data on two cars that are identical in every respect except the probability of being involved in a fatal accident. Car X is safer, with an annual mortality risk 0.0001 less than car Y. The annualized cost is $29,700 for car X and $29,000 for car Y. If someone buys car X instead of car Y, what does this imply about their VSL? D. Give one argument for and one argument against the following proposition: \"A lower VSL should be used for old people than for young people.\" E. What, if anything, does an individual's VSL indicate about the amount they would have to be paid to engage in an activity that was certain to result in their immediate death. F. Risk-risk analysis points out that estimates of the number of statistical lives saved by a policy may be overstated because of the rebound effect. Briefly describe what this is