Prescribing Preferred Policies

**Question 1**

- Type II problem (Equal-Effectiveness): This is mainly because this type of problems involves equal effectiveness and variable costs. Therefore, the level of valued outcomes or effectiveness is fixed; while the costs are maintained minimum because its aims to minimize costs (Dunn, 2012).
- Type I problem (Equal-Cost): This type of problems involves equal costs and variable effectiveness. Therefore, this policy can be prescribed when fixed costs results from the maximum allowable budgetary expenditures, and its aim is to ensure maximization of effectiveness within the limits of the resources that are available (Wiemer & Vining, 1989; Fischer
*et al.,*2006). - Type IV problem (Equal-Cost-Equal-Effectiveness): This type of problems involves equal costs as well as equal effectiveness. Moreover, equal-cost–equal-effectiveness analysis is involved in this type of problems, but they usually prove to be difficult to solve. This is because there is limitation by the need not to exceed certain amount of costs while ensuring the predetermined levels of effectiveness are satisfied (Dunn, 2012).
- Type III problem (Variable-Cost-Variable-Effectiveness): This type of problems involves variable costs and variable effectiveness. In this scenario the market price is considered because it keeps on varying leading to the maximization of the level of effectiveness at an optimal budget in order to attain agency objectives. The response to type III problems is usually referred to as the variable-cost–variable-effectiveness analysis, due to the fact that both costs and effectiveness can vary freely (Wiemer & Vining, 1989).
- Type III problem (Variable-Cost-Variable-Effectiveness): This type of problems involves variable costs and variable effectiveness. However, since in this type of problems both costs and effectiveness can vary freely, then it is the preferred prescribed policy because it is the most adequate policy to appropriately maximize the ratio of effectiveness to costs or the ration of benefits to costs (Fischer
*et al.,*2006).

**Question 2**

*Type I problem (Equal-Cost) Criterion:* Program II

*Justification:* Program II is preferable because it achieves the higher level of effectiveness while remaining within the fixed-cost limitation (Dunn, 2012).

*Type II problem (Equal-Effectiveness) Criterion:* Program I

*Justification: *Program I is preferable since it fixed level of effectiveness is achieved at least cost (Dunn, 2012).

*Type III problem (Variable-Cost-Variable-Effectiveness) Criterion:* Program II

*Justification:* Program II is preferable, mainly due to the fact that effectiveness–cost ratio (called the ratio of effectiveness to costs) is greatest at the intersection of E1 and C1 (Figure 5.2).

*Type IV problem (Equal-Cost-Equal-Effectiveness) Criterion:* Neither program is adequate as a result of criterion overspecification

*Justification:* This is attributable to the fact that both effectiveness and costs are fixed at E_{2} and C_{2} (Figure 5.2), meaning there is no particular program which is adequate to be selected (Dunn, 2012).

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**Question 3**

*Type I problem (Equal-Cost) Criterion *

The condition under which this criterion would be an adequate measure of the achievement of objectives includes where a fixed budget is two programs is provided. The alternative that results to the greatest level of effectiveness at equal cost will be the preferred choice. Therefore, the conditions for this criterion are where the most adequate policy leads to maximum achievement of objectives while the limits of fixed costs are maintained (Dunn, 2012).

*Type II problem (Equal-Effectiveness) Criterion*

The condition under which this criterion would be an adequate measure of the achievement of objectives includes where the available facilities or resources must serve a specified number of people per a particular period. Therefore, the preferred option is where a fixed level of effectiveness is maintained at least cost (Dunn, 2012).

*Type III problem (Variable-Cost-Variable-Effectiveness) Criterion*

The condition under which this criterion would be an adequate measure of the achievement of objectives includes where there is maximization of the level of effectiveness at an optimal budget in order to attain agency objectives (Dunn, 2012). Therefore, the main condition for this criterion is when there is to appropriately maximize the ratio of effectiveness to costs or the ration of benefits to costs.

*Type IV problem (Equal-Cost-Equal-Effectiveness) Criterion*

The condition under which this criterion would be an adequate measure of the achievement of objectives includes where the available facilities or resources must serve a specified number of people per a particular period, at costs that have been fixed at a level that is unrealistic meaning both constraints must be satisfied (Dunn, 2012).

**Question 4**

There are various assumptions that govern estimates of the value of time lost driving. First, the average wage rate for all labor force members is used which was $5.05 per hour in 1974, but it is assumed that very few people will pay this amount of money per hour to avoid travelling for one hour. Second, it is also assumed that most people will pay approximately up to 33 percent of their hourly wage rate on average in order to avoid an hour of commuting (Dunn, 2012). Between these two assumptions none which is more tenable than the other because the first one does not consider commercial drivers value while the second assumption reduces value of people’s time something which should have been avoided because people commute for varied reasons (Dunn, 2012).

**Question 5**

The best way to calculate the value of time would be to consider each case individually as well as making tenable assumptions. For instance, the value of time spend by drivers should not be generally assumed because the value of time spend by commercial drivers vary from that of other driver, and failure to treat it so would undermine their value (Dunn, 2012).

**Question 6**

The best way to estimate the cost of a gallon of gasoline is to ensure that the average price of gasoline used in calculations is a true reflection of social cost of gasoline, rather than merely using the market price of gasoline which is subject to several shortcomings (Dunn, 2012). For example, the used price of gasoline should reflect the presence and absence of price controls. In addition, it should be highlighted when imported gasoline and domestic reserve gasoline are used since it is obvious the former is always more expensive than the latter (Dunn, 2012).

**Question 7**

Between the official statistics on highway traffic from the Environmental Protection Agency and the engineering studies of the efficiency of gasoline engines by the Department of Energy, the second one is a more reliable method to estimate driving speeds and miles per gallon (U.S. Department of Transportation, 2013; U.S. Environmental Protection Agency, 2013). This is attributable to the fact that the calculations in the first method are based on various assumptions that are untenable (U.S. Department of Transportation, 2013; U.S. Environmental Protection Agency, 2013). However, considering the conflicts between estimates of the two methods, it is evident that the major consequence of using one method instead of the other would mean conflicting policies would be formulated because the figures used would be subject to error (Dunn, 2012).

**Question 8**

Using the statistics of 1974 the estimated value of a life saved is $ 0.24 million.

*Justification:* This is attributable to the fact that in 1974 the total number of lives saved was estimated to be 5,332, while in the same year the value of lives saved was estimated at $ 1,279.7 million. Then dividing the value of lives saved by the total number of lives saved, the figure indicated above is obtained (Dunn, 2012).

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**Question 9**

The 55-mph speed limit is the preferable policy.

*Justification:* As observed from the figures shown in this case study, the 55-mph speed limit policy results to significant saving of gasoline used per mile driving as well as a significant reduction in the number of fatalities through road accidents (Dunn, 2012).

**References **

Dunn, W.N. (2012). *Public Policy Analysis: An Introduction,* 5^{th} ed. Upper Saddle River, NJ: Pearson Education, Inc.

Fischer, F., Miller, G.J., & Sidney, M.S. (2006). *Handbook of Public Policy Analysis: Theory, Methods, and Politics*. New York, NY: Marcel Dekker.

U.S. Department of Transportation, (2013). Available at: http://www.dot.gov/ (Accessed on 22^{nd} November 2013).

U.S. Environmental Protection Agency, (2013). Available at: http://www.epa.gov/ (Accessed on 22^{nd} November 2013).

Wiemer, D.L., & Vining, A.R. (1989). *Policy Analysis Concepts and Practice*. New York, NY: Prentice Hall.

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