Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This is the problem, need answers, show work 4) Assume Congress is considering a change to the SNAP (Food Stamps) program with the primary goal

image text in transcribed

This is the problem, need answers, show work

image text in transcribed
4) Assume Congress is considering a change to the SNAP (Food Stamps) program with the primary goal of reducing the rates of obesity and their corresponding social costs in the United States. The proposal is to subsidize the purchase of "healthy" foods through the SNAP program. Each dollar a participant spends on "healthy" foods is automatically doubled (in other words, with $1 in benefits, you can either buy $1 of junk food or $2 of healthy foods). The program will have a fixed net present cost of $50 billion and a fixed net present value of $20 billion in benefits regardless of how much is spent on healthy foods. Any additional costs or benefit will be determined by how often people use their benefits to buy Help healthy foods. If every dollar of benefits is spent on healthy foods, then the program will cost an additional $50 billion and produce a net present value of $200 billion in additional benefits from savings in health care, lives saved, and increased productivity. Experts predict that 50% of the benefits will be spent on healthy foods while 50% will still be spent on unhealthy foods. How much will the program cost? What will be the benefit? Does it pass a cost-benefit test? Would this change if only 25% of the benefits were spent on healthy foods? Would it change if only 10% of the benefits were spent on healthy foods? (Show me the math!) NPV = N/(1+r), where ominal value of future cost or benefit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

1119563097, 9781119563099

More Books

Students also viewed these Mathematics questions