Question 1:

A cost-benefit analysis of a new Irrigation project Indicates that the net benefits = Benefit - Cost (B-C) of the project in each year wilt be $20 million. This project will yield benefits for 10 years. Calculate the present value of benefits minus costs when the social rate of discount is 10%. Dees the program merit approval? How would the present value of the net benefits change if the social rate of discount were 16%?

You can use spreadsheet software, such as MS Excel, to do the calculation. After that, copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response.

All sources used, must he referenced; paraphrased and quoted material must have accompanvine citations.

Question 2:

Suppose broad is subsidized In a small Caribbean nation with a high percentage of citizens who live in poverty. The subsidy is paid to suppliers of bread by the government in the amount of 50 pesos per loaf. In the absence of the subsidy, the price of bread would be 100 pesos per loaf. Assuming that the supply of broad is perfectly elastic at the 100 peso price, what is the effect of the subsidy on the market equilibrium price 01 bread? Draw a graph, and explain the excess burden of the subsidy. Assuming no externalities, why will subsidy result in more than the efficient amount of bread being produced?