Suppose You Attend a Town Meeting at Which Some Experts

question 29

Multiple Choice

Suppose you attend a town meeting at which some experts tell the audience that they have performed a cost-benefit analysis of a proposed transit system that would probably reduce overall air pollution and fossil fuel consumption. The analysis, however, reveals that ticket prices will not cover the cost of operating the system when fuel, wages, and equipment are taken into account. As a biologist, you know that if ecosystem services had been included in the analysis the experts might have arrived at a different answer. Why are ecosystem services rarely included in economic analyses?

• A) Their cost is difficult to estimate and people take them for granted.
• B) They are not worth much and are usually not considered.
• C) There are no laws that require investigation of ecosystem services in environmental planning.
• D) There are too many variables to ecosystem services, making their calculation impossible.
• E) Ecosystem services only take into account abiotic factors that affect local environments.

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Definitions:

Product-line Pricing

A pricing strategy where different products in the same product line are priced differently, often based on features, materials, or product versions.

Cost-plus-percentage

A pricing method where a fixed percentage is added to the total cost of production as the profit margin.

Variable Costs

Costs that change in proportion to the goods or services that a business produces.

Yield Management Pricing

A pricing strategy that involves setting flexible prices for products or services based on understanding, anticipating, and influencing consumer behavior in order to maximize revenue.