Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Mining is proposed for a wilderness area that provides two benefits: recreation (due to backpacking opportunities) and biodiversity (there are endangered wildlife and plants). The mining is expected to reduce backpacking visits from the current 10,000 recreation visitor-days (RVDs) per year to 4,000 RVDs per year for the next 10 years; after that time, recreation use would partially rebound to 7,000 RVDs per year into perpetuity. If the mine is not opened, recreational use is expected to continue at current levels into perpetuity. Mining is expected to bring profits of $1 million per year for the 10 years of mining operations.

a. What is the present value of mining in the area (excluding effects on recreation) if the interest rate is 6%? If it is 3%?
b. If one RVD of backpacking is worth $P, what is the present value of recreation in the area if it is mined? If it is not mined? Do this calculation using both a 6% and a 3% discount rate.
c. How much would an RVD of backpacking have to be worth (i.e., what is P) to make the benefits of mining worth less than the benefits of not mining, considering only the benefits and costs of mining and recreation? Do the calculation for both 6% and 3% discount rates.
d. Suppose that travel cost studies determined that an RVD of backpacking in the wilderness is worth $80 per RVD. Would preservation be the efficient solution, considering only the benefits and costs of recreation and mining, at 6% discount rate? At 3% discount rate?
e. Which discount rate makes the best case for mining?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M940343

Have any Question? 


Related Questions in Microeconomics

Economics problemsconsumer demand analysis and estimation

Economics Problems Consumer Demand Analysis and Estimation Applied Problems Please complete the following two applied problems: Problem 1: Patricia is researching venues for a restaurant business. She is evaluating three ...

Mcdonalds and the hindu culturein many ways mcdonalds

McDonald's and the Hindu Culture In many ways, McDonald's Corporation has written the book on global expansion. Every day, on average, somewhere around the world 4.2 new McDonald's restaurants are opened. By 2003, the co ...

Discussion questionsi need 3 different discussion to be

Discussion Questions I need 3 different Discussion to be answered, by replying to what the student wrote. I'll forward the Discussions as we agree to shake hands. Word counts asnwer question no more than 100 words if mor ...

Assignmenta computerworld investigation reported that

Assignment A Computerworld investigation reported that delays in overhauling the federal tax system have cost the U.S. government approximately $50 billion a year in uncollected taxes. Although the IRS has spent hundreds ...

Assignment1in your own words please define describe and use

Assignment 1. IN YOUR OWN WORDS, please define, describe and use an example for the following term (see below). The term (including example) should be no more than 50 words.The following rubric is used to assess each ter ...

Leasing equipmentfor catherine owens onlybullsuggest one

Leasing Equipment For Catherine Owens Only • Suggest one key economic factor that motivates leasing as an option in acquiring an asset. Explain the potential asymmetries that may exist where leasing may be beneficial to ...

Assignmentselect and review an inspection report posted on

Assignment Select and review an inspection report posted on the OSHA website. The inspection reports can be searched by industry group or establishment name by accessing the reports through the OSHA's Statistics & Data P ...

Assignmentdraw the graph carefully please use one graph

Assignment Draw the graph carefully. Please use one graph per country and show both the autarkyand the free trade equilibrium on each graph. Consider the following data on the factor endowments of two countries A and B: ...

Problem -the table below gives the income of each of four

Problem - The Table below gives the income of each of four individuals who are in a region. Calculate and plot the Lorenz curve and calculate the Gini coefficient for this economy. individual income 1 100 2 200 3 300 4 4 ...

Assignmentthe paper is on googles business ethics in the

Assignment The paper is on Google's Business Ethics in the area of Sustainability. How does Google contribute or detract from various aspects of sustainability? Sustainable businesses make products and services which fil ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro