Previous Exams

# Spring 2011 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) Plan 1: $8255. (b) Plan 2:$6808.

(c) Plan 2 is better: lower expected NPV cost.

### Question 2

(a),(b) Market Q=300, P=$600. (c) Efficient Q=400. (d) Subsidized price: Psub =$400.

(e) Subsidy rate: S=$400. (f) Total cost of the subsidy:$160,000.

(a) Qat=42,000.
(b) T=$6. (c)-(h) in table below:  Type Original Emissions Qa Cost of abatement Unabated emissions Tax Payments A 100 60 180 40 240 B 800 600 1800 200 1200 ### Question 4 (a) P=$40 (Qt=70).
(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 60 40 800 700 -100 2.5 -- 22.5 2 60 20 400 700 +300 -- 7.5 32.5 3 60 10 200 0 -200 5 -- 55

### Question 5

(a),(b) B=5, C=2.

(c),(d) Q=200, P=$300. (e) DWL=$6500.

URL: https://wilcoxen.maxwell.insightworks.com/pages/3433.html
Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 12/18/2012