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) Qa total = 90;
(b) Qp1 = 120; Qp2 = 90; 210 permits total;
(c) Qa total = 120;
(d) DWL = $5,625;
(e) P = $225;
(f) Firm 1 sells 15 permits to firm 2 for $3,375 of revenue.
(a) Number of visitors=13,025;
(b) A = 13.166, B = 1/1595 (0.000627);
(c) CS = $138,245;
(d) Value to non-visitors = $120,000;
(e) PV = $2.58 million.
(a) 220 cases;
(b),(c) 20 for 20 μg/L, 100 for 10 μg/L;
(d),(e) $20 million for 20 μg/L, -$200 million for 10 μg/L;
(f) 20 μg/L. The public's willingness to pay for risk reduction is greater than that policy's cost. In contrast, the cost of the 10 μg/L standard is higher than the public's WTP.
(a) Neighborhood L because the MSC is $480K there instead of $600K in H;
(b) Q = 800, with a cost of 800*$400K = $320M;
(c) SS = $768M;
(d),(e) gross benefits: H=$960M, L=$192M;
(f) net benefit to L: $192M - $213M construction - $64M externalities = $85M loss;
(g) Area L will oppose the plant unless it is compensated at least $85M.
(a) The table is shown below:
(b) With the backstop, the table becomes:
(c) Backstop production=70.
(a) MDC = $120;
(b) P = $320;
(c) The table without exploration:
(d) The table with exploration:
(e) Resource found via exploration = 60;
(f) Expected number of wells = 20.