PAI 723 Economics for Public Decisions > Exams from Previous Semesters

Spring 2018 Exam 1 Solution

Here are the final numerical results for each section of the exam. You can use them to check your work if you do the exam for practice.  If you have trouble with the problems, or don't get the answers shown here, stop by during office hours or make and appointment and we can go over them.

Question 1

(a) P=$420; Q=5400; Qai=30; Qxi=270; graph omitted.

(b) Pd=$400; Ps=$500; Q=7000; change in CS=+$800; values of subsidy received by households: A=$1000, B=$2000; effective subsidy rates to households: A=2.5%, B=2%; policy is progressive.

Question 2

WTAf = $150; new P=$150; Q demanded=3000; Qs domestic=500; Qs foreign=2500; change in CS=+$125k; change in PS domestic=-$37.5k; change in revenue=-$50k; change in SS=+$37.5k.

Question 3

Original P=$900, Q=200; efficient Q=227; efficient Pd=$765, Ps=$1008; subsidy rate=$243; change in CS=+$28,822.5; change in PS=+$23,058; change in revenue=-$55,161; change in external benefits=+$6196.5; change in SS=+$2916.

Question 4

Extra revenue=$10 million; WTAh=$800; new Ql=112,500, Qh=25,000; change in CSl=+$10.625 million, CSh=-$7.5 million; change in SS=+$3.125 million.

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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 03/09/2018