Cost-benefit analysis A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing rival/nonrival excludable/non-excludable For the students of the college, the visual appearance of the campus is and . Thus, the visual appearance would be classified as a public good Suppose the college administrators estimate that the beautification initiative will cost $2,040. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 420 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is 12. ess/greater The benefit of the beatification initiative, as suggested by the survey, is cost, the college administrators Because the estimated benefit is than the undertake the beautification initiative. shoud/should not
The calculation of the benefit of the beatification initiative relied on the ability of the administrators to accurately capture the true willingness-to-pay of each student.
Which of the following scenarios would cause the survey used by the college administrators to yield misleading willingness-to-pay data?
a. Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.
b. An equal number of male and female students were surveyed.