The benefit of cutting down a forest is $1 million now The environmental cost of that harvest is $10 year forever (a) At a 0 percent discount rate, are the benefits of harvesting greater than the costs Why or why not (b) The private market discount rate is 4 percent, but the government has decided ...

a At 0 percent the damages will outweigh the benefits after 100000 yea ...

The benefit of cutting down a forest is $1 million now. The environmental cost of that harvest

Question:

The benefit of cutting down a forest is $1 million now. The environmental cost of that harvest is $10/year forever.
(a) At a 0 percent are the benefits of harvesting greater than the costs? Why or why not?
(b) The private market is 4 percent, but the government has decided to use a social of 0 percent. What is the associated with using the social in this situation? Explain.
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...