Economic assignment due in 10 hours!!

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TECON 480

Spring 2019

Instructor: Beaudoin

Due: April 23, 2019

Assignment #1 (Answer Key)

• While you are welcome to discuss the assignment with classmates and incorporate our

classroom discussions, each student must submit their own assignment

• Assignments are due by midnight on the date indicated (they may be submitted via email or

uploaded to Canvas)

• Late assignments will receive a 25 percentage point penalty for each day it is submitted

beyond the due date

In this assignment, we will begin our analysis of Pierce Transit’s potential investment in bus rapid

transit (BRT) along the Pacific Avenue corridor. See Slides 38-40 in the Class 4 notes for some

background information relating to this project.

This assignment covers Steps 1-3 of the cost-benefit analysis framework. Please provide a separate

heading/section for each of the three steps. These sections will subsequently be used as part of the

final report, after you incorporate the feedback that I provide and as your thoughts develop throughout

the course. Note that there is no minimum/maximum length of the various sections at this point.

Step 1: Specify the set of alternatives.

In this section, discuss the potential alternatives available to the decision-maker and explain/justify

which alternatives you will choose to analyze. Be sure to specify the status quo (or the counterfactual)

that will be used.

For the purposes of our assignment, we will focus on analyzing only two alternatives:

Alternative 1: do not build the BRT (the status quo, which will be considered as the counterfactual)

Alternative 2: build the BRT

Step 2: Decide whose benefits and costs count (standing).

In this section, discuss who the decision-maker is in your analysis, the objective of the analysis that

will be undertaken, and whose benefits and costs should count in the analysis given the context.

For this assignment, we can assume that either Pierce Transit or the Pierce County voters are the

decision-makers. The objective of the analysis is to decide whether or not to build the BRT system,

and we can assume that both Pierce Transit and voters would only want to move forward with building

the BRT if it was worthwhile from society’s perspective.

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For standing, we would have to decide whether only the effects on Pierce Transit residents should be

considered; for this assignment, we will assume that the impacts of the project outlined in Assignment

2 are all related to those with standing in the project.

Step 3: Identify the impact categories, catalogue them, and select measurement indicators.

In this section, discuss the potential impacts of the project and classify them as costs or benefits (or

undetermined, if it is potentially the case that the impact could be either a cost or a benefit). For each

impact, suggest the “physical” units that you would ideally use to measure these impacts; note that at

this point, these impacts should just be identified qualitatively, and you do not have to discuss how

you would quantify/monetize these impacts. As an example, suppose the project was an investment

in a new recycling facility. You may think that one of the impacts would be a reduction in plastic

waste in the landfill, that this would be a benefit to society, and that you would measure it by the

number of tons of plastic “saved” from the landfill over the course of a year.

There are many possible impacts of the BRT project, both in terms of costs and benefits. The key is

to include only effects that are incremental and any changes are caused by the BRT project. It is also

important to properly use economic theory to measure the impacts appropriately (along the lines of

our discussions throughout the class).

For our assignment, we will only be including the impacts that have information provided in

Assignment 2. We should note that this list is not exhaustive and for practical reasons we are limiting

the impacts included in the analysis. For Assignment 2, you should use only the impacts listed in the

Assignment 2 instructions, and not the previous impacts that you outlined in Step 3 of Assignment 1.