The Maxwell School
Syracuse University
Syracuse University
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.
(a) EV of PV of risk = $2 per unit
(b) tax = $2
(c) efficient price of the resource = $22
(d) percent change in extraction = 5% decrease
(a) market P = $1200
(b) market Q = 150
(c) efficient Q = 300
(d) efficient P = $900
(e) subsidy needed per unit = $300
(f) total cost to the government = $90,000
(a) efficient abatement = 1200
(b) efficient tax rate = $4
(c)-(g) in table below:
| Type |
Original Emissions |
Qa |
Cost of abatement |
Unabated emissions |
Tax Payments |
| 1 | 50 | (c) 8 | (e) 16 | 42 | (g) 168 |
| 2 | 50 | (d) 40 | (f) 80 | 10 | (h) 40 |
(a) equilibrium permit price = $8
(b)-(d) in the table below:
| Type |
Original Emissions |
Qa |
Cost of abatement |
Target cost |
Change needed |
Permits to sell |
Permits to buy |
Initial allocation |
| 1 | 32 | 8 | 32 |
56 | +24 | 0 | 3 |
(b) 21 |
| 2 | 32 | 16 | 64 | 56 | -8 | 1 | 0 | (c) 17 |
| 3 | 32 | 32 | 128 | 112 | -16 | 2 | 0 | (d) 2 |
(a) A = 130
(b) B = 3
(c) market P = $65
(d) market Q = 650
(e) efficient P = $75
(f) efficient Q = 550