Question 7: Ffficient Regalation of Drinking Water When setting standards for lead in Arinking wate, the LPA contidered throe options illustrated in the Table below. The symbol ug/ stands for micrograms (millionths of a gram) per lifer. Standard A, the most strict standard, would require municipal systems (small and large in siza) to take action if lead levels standard for both small and large at is upl. The EPA undertook a benefit-cost analysis of the proposed standirds as part of a Regulatory lmpact. Assessment. The final results are reproduced in the next Table, (Note, there are 5 questions listed below) 1. What are the net benefits of the three options? Which option is the most efficient? Is there a conflict between safety and efficiency here? 2. The marginal benefit of option A(S5,192) in the fourth line of the table is derived from the total benefit values listed in the first line of the table. How is this number calculated? 3. The marginal benefits and costs for option C are measured relative to a no-regulation baseline. Are the MB > MC for option C? Option B? Option A? Does this result contradict your answer to part 1? 4. Option B has the biggest benefit/cost ratio. Does this contradict your answer to part 1 ? Lead is a well-known neuro-toxin. Some credit lead in drinking water to contributing to the downfall of the Roman Empire! Lead also has additional health impacts. The third Table illustrates the impacts the FICURE 4.9. Uncrnainty of Benefit-Cost Eximales for Corrotion Control Source US. Eavironmental Protection Aprocy (t991a). 5. Given the uncertainty, the EPA picked Option B even though Option A has a bigger net benefit. How can you justify this selection? Question 7: Ffficient Regalation of Drinking Water When setting standards for lead in Arinking wate, the LPA contidered throe options illustrated in the Table below. The symbol ug/ stands for micrograms (millionths of a gram) per lifer. Standard A, the most strict standard, would require municipal systems (small and large in siza) to take action if lead levels standard for both small and large at is upl. The EPA undertook a benefit-cost analysis of the proposed standirds as part of a Regulatory lmpact. Assessment. The final results are reproduced in the next Table, (Note, there are 5 questions listed below) 1. What are the net benefits of the three options? Which option is the most efficient? Is there a conflict between safety and efficiency here? 2. The marginal benefit of option A(S5,192) in the fourth line of the table is derived from the total benefit values listed in the first line of the table. How is this number calculated? 3. The marginal benefits and costs for option C are measured relative to a no-regulation baseline. Are the MB > MC for option C? Option B? Option A? Does this result contradict your answer to part 1? 4. Option B has the biggest benefit/cost ratio. Does this contradict your answer to part 1 ? Lead is a well-known neuro-toxin. Some credit lead in drinking water to contributing to the downfall of the Roman Empire! Lead also has additional health impacts. The third Table illustrates the impacts the FICURE 4.9. Uncrnainty of Benefit-Cost Eximales for Corrotion Control Source US. Eavironmental Protection Aprocy (t991a). 5. Given the uncertainty, the EPA picked Option B even though Option A has a bigger net benefit. How can you justify this selection
