Suppose your city is debating a change in policy from illegal use to legalizing recreational use of marijuana and cannabis products. Your local officials ask you to identify the appropriate aspects required to perform a cost- benefit analysis of this policy change. Using the principles of cost-benefit analysis, your local officials need help in identifying and understanding the benefits to consumers, the benefits to producers, total costs to consumers, total costs to producers, total costs from possible externalities, opportunity costs, incommensurable effects and intangible effects. For simplicity, dynamic time effects, which involve discount rates, are ignored. Following the principles of cost-benefit analysis, are the possible positive health effects (a positive externality) accounted for in cost-benefit analyses? O No. The health effects do not factor into cost-benefit analysis. O Yes. The health effects should be estimated but are a transfer and thus ultimately do not count towards benefits or costs. O Yes. The health effects should be estimated and accounted for as a social opportunity cost or should be disclosed as an incommensurable. O Yes. The health effects should be estimated and accounted for as a benefit or should be disclosed as an incommensurable.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Suppose your city is debating a change in policy from illegal use to legalizing recreational use of marijuana and cannabis products. Your local officials ask you to identify the appropriate aspects required to perform a cost- benefit
analysis of this policy change. Using the principles of cost-benefit analysis, your local officials need help in identifying and understanding the benefits to consumers, the benefits to producers, total costs to consumers, total costs
to producers, total costs from possible externalities, opportunity costs, incommensurable effects and intangible effects. For simplicity, dynamic time effects, which involve discount rates, are ignored.
Following the principles of cost-benefit analysis, are the possible positive health effects (a positive externality) accounted for in cost-benefit analyses?
O No. The health effects do not factor into cost-benefit analysis.
O Yes. The health effects should be estimated but are a transfer and thus ultimately do not count towards benefits or costs.
O Yes. The health effects should be estimated and accounted for as a social opportunity cost or should be disclosed as an incommensurable.
O Yes. The health effects should be estimated and accounted for as a benefit or should be disclosed as an incommensurable.
Transcribed Image Text:Suppose your city is debating a change in policy from illegal use to legalizing recreational use of marijuana and cannabis products. Your local officials ask you to identify the appropriate aspects required to perform a cost- benefit analysis of this policy change. Using the principles of cost-benefit analysis, your local officials need help in identifying and understanding the benefits to consumers, the benefits to producers, total costs to consumers, total costs to producers, total costs from possible externalities, opportunity costs, incommensurable effects and intangible effects. For simplicity, dynamic time effects, which involve discount rates, are ignored. Following the principles of cost-benefit analysis, are the possible positive health effects (a positive externality) accounted for in cost-benefit analyses? O No. The health effects do not factor into cost-benefit analysis. O Yes. The health effects should be estimated but are a transfer and thus ultimately do not count towards benefits or costs. O Yes. The health effects should be estimated and accounted for as a social opportunity cost or should be disclosed as an incommensurable. O Yes. The health effects should be estimated and accounted for as a benefit or should be disclosed as an incommensurable.
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