Previous Exams

# Spring 2010 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 G1/H4

(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 ### Question G2/H2 (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 ### Question G3/H1 (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 ### Question G5/H3 (a) A = 130 (b) B = 3 (c) market P =$65
(d) market Q = 650
(e) efficient P = \$75
(f) efficient Q = 550

URL: https://wilcoxen.maxwell.insightworks.com/pages/3076.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 12/18/2012