question 5

'I'ou are the chief decision maker for the city of Macondo. The Cit'f has been struck by a horrendous insomnia plague. The most devastating symptom of the plague is not the impossibility of sleep, but rather the loss of 'the name and notion of things'. The plague is contagious and spreads by person-to- person contact. The progressive breakdown of conceptual knowledge by the plague equates to using the statistical value of a Macondian life 'In assessing what to do. Too have to decide the following: Facts about Macondo: Population: 250,000 Sq mileage: 125 km2 Yearly tax income per Macondian: $23,000 Debt capacity (how much you can borrow): $3.9 B Statistical Value of a Macondian Life: $150,000 Standard rate of evaluation in public sector economics: 15% per year, compounded monthlyEstimate Cost per Month to Shut Down Macondo: Macondo Shutdown Costs 6 5.7 5.2 5 4.7 4.3 4 3.9 3.5 3.2 2.9 2.7 2 1 1 0 1 2 3 4 5 6 7 8 [costs shown in $B; a 10% increase per month occurs after month 1]In addition to the costs shown, it will damage businesses and economic competitiveness, as well as psychological issues for the population of Macondo for years to come. Those costs are estimated to be 545 B in PW and count as a Disbenefit to society. Insomnia plague: Estimated that it would take 12 months of quarantine and safety measures to eradicate the plague. Estimated that the plague would spread by 12% each month without quarantine until month 4 when it would spread by 22% per month. The population could reach herd immunity once lithe populaon has the plague. Estimated that there are 15,000 people currently with the plague today. It is too late for them. Stopping the plague is measured by the number of people that do not get the plague after them and the value of those lives saved is a Benefit to society.5. The total PW value as a Benefit to society of a shutdown is 5B