PAM 3300/5300: Cost-Benefit AnalysisPRELIMINARY EXAMINATION #1NAME____________________________March 8, 2017Professor: Don KenkelRead all questions carefully and be sure to answer the question asked. Answer in the spaceprovided. (You may continue your answers on the backs of pages if necessary.)75 total points, to be completed in 75 minutes.1. Background: An Executive Order on “Regulatory Costs�
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PAM 3300/5300: Cost-Benefit Analysis
PRELIMINARY EXAMINATION #1
NAME____________________________
March 8, 2017
Professor: Don Kenkel
Read all questions carefully and be sure to answer the question asked. Answer in the space
provided. (You may continue your answers on the backs of pages if necessary.)
75 total points, to be completed in 75 minutes.
1. Background: An Executive Order on “Regulatory Costs” issued January 30, 2017 requires
that whenever a federal agency proposes a new regulation, the agency must: identify two prior
regulations to be eliminated; and show that the costs of the new regulation are less than the costs
saved by eliminating the two prior regulations.
True-False-Uncertain: EXPLAIN. (Your score depends heavily on your explanation.)
“Because costs will be reduced, any proposal (1 new regulation and 2 eliminated regulations)
will pass the Kaldor-Hicks/ potential Pareto improvement criterion, but will not necessarily pass
the strict Pareto improvement criterion.” (10 points)
1
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2. True-False-Uncertain: EXPLAIN. “Economists generally regard private markets
as operating unsatisfactorily (market failures) when they fail to produce
goods for people who cannot afford to pay for them.” [5 points]
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