Problem 3: Income and Substitution Effect See the Table below. In 2001 the Environmental Protection Agency chose one of the following maximum allowable levels of Arsenic. Which one would you choose, if any, and why? 1 Table 1: Alternate Arsenic Standard Benefits and Costs Arsenic standard 3P PB 5PPB 10PPB 20PPB 698 - 792 415 - 472 180 - 206 - 67 - 77 Compliance cost (millions of USD) Health benefit (millions of USD) Cancer cases avoided 214 - 491 191 - 356 140 - 198 66 - 75 57 - 138 51 - 100 37 - 56 19 - 20 - If half the cancer case resulted in death, and each life saved by the standard is assumed to be worth 6 million dollars, recalculate the health benefits and consider the choices again. Which level of arsenic would be chosen now? The answer may depend on which number of cancer cases you choose Problem 3: Income and Substitution Effect See the Table below. In 2001 the Environmental Protection Agency chose one of the following maximum allowable levels of Arsenic. Which one would you choose, if any, and why? 1 Table 1: Alternate Arsenic Standard Benefits and Costs Arsenic standard 3P PB 5PPB 10PPB 20PPB 698 - 792 415 - 472 180 - 206 - 67 - 77 Compliance cost (millions of USD) Health benefit (millions of USD) Cancer cases avoided 214 - 491 191 - 356 140 - 198 66 - 75 57 - 138 51 - 100 37 - 56 19 - 20 - If half the cancer case resulted in death, and each life saved by the standard is assumed to be worth 6 million dollars, recalculate the health benefits and consider the choices again. Which level of arsenic would be chosen now? The answer may depend on which number of cancer cases you choose