In theory the market's willingness-to-pay (WTP) should be equal to the market's willingness-to-accept (WTA). In other words, if you are willing-to-pay $1 for an incremental improvement in tap water quality, then you should be willing-to-accept $1 for an incremental decrease in tap water quality. In practice, however, the two are often estimated to be unequal. Which of the following helps to explain this disparity?
a. the WTA/WTP disparity
b. the endowment effect
c. benefit transfer
d. value of statistical life
e. cost-benefit analysis
f. expected value
g. risk and uncertainty
h. None of the above.
Ans: b. the endowment effect
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A. $50 million.
B. $100 million.
C. $200 million.
D. $300 million.
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