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Question 4. [20 points) A researcher is deciding whether or not the environmental quality in a community should be improved from qo = 1 to 4. = 2 at the cost of $7. She used nonmarket valuation methods to estimate the welfare function (or utility function) of a local community, and will compare the welfare gain with the cost to make a recommendation. The welfare function U(y,q) depends on the income level and environmental quality, and the current income level is y = $10. 4a) [10 points] Suppose the community's welfare (or utility) function is given by Uby,q) = y + q. Find the WTP for the environmental improvement (from 1 to 2), and the WTA for forgoing 1 the environmental improvement. With the WTP or WTA numbers, does this project pass the benefit-cost test? 4b) [10 points] Suppose instead the community's welfare (or utility) function is given by U(y,q) = yq. Find the WTP for the environmental improvement (from 1 to 2), and the WTA for forgoing the environmental improvement. With the WTP or WTA numbers, does this project pass the benefit-cost test? Question 4. [20 points) A researcher is deciding whether or not the environmental quality in a community should be improved from qo = 1 to 4. = 2 at the cost of $7. She used nonmarket valuation methods to estimate the welfare function (or utility function) of a local community, and will compare the welfare gain with the cost to make a recommendation. The welfare function U(y,q) depends on the income level and environmental quality, and the current income level is y = $10. 4a) [10 points] Suppose the community's welfare (or utility) function is given by Uby,q) = y + q. Find the WTP for the environmental improvement (from 1 to 2), and the WTA for forgoing 1 the environmental improvement. With the WTP or WTA numbers, does this project pass the benefit-cost test? 4b) [10 points] Suppose instead the community's welfare (or utility) function is given by U(y,q) = yq. Find the WTP for the environmental improvement (from 1 to 2), and the WTA for forgoing the environmental improvement. With the WTP or WTA numbers, does this project pass the benefit-cost test