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.
(1) Q1=800, Q2=1600, Q3=3200 (5600 total); TCA over all 3 firms is $448K.
(2) Tax=$160; Cost 1=$576K, Cost 2=$512K, Cost 3=$384K.
(3) Pp=$160; Qp1=2666 2/3, Qp2=2266 2/3, Qp3=1466 2/3.
(4) Pp=$280; Efficient equilibrium MCA=250, Qa=5000; DWL=$36K.
(1) Abatement Qa=600; Emissions Qp=400; MCA=MCB=300.
(2) Pp=300 (at hybrid P); Qa=300 so Qp=700; thus, new permits from the government=300.
(3) Qp=400 (at hybrid Q) so Qa=600; Pp=250; Q purchased=0.
(1) Results are shown below:
| Period | R | MEC | P | Q |
| 1 | 100 | 400 | 500 | 250 |
| 2 | 200 | 300 | 500 | 350 |
| 3 | 400 | 200 | 600 | 400 |
| Total | 1000 |
(2) Results with the backstop are as follows:
| Period | R | MEC | P | Q |
| 1 | 70 | 400 | 470 | 265 |
| 2 | 140 | 300 | 440 | 380 |
| 3 | 280 | 200 | 480 | 460 |
| Total | 1105 |
Amount produced via the backstop: 105.
(1) Baseline cases: A=16, B=28.8, C=28, D=33.6.
(2) See tables below.
Total mortality:
| Community | Baseline | 3μg | 5μg | 10μg | 20μg |
| A | 16 | 12 | 16 | 16 | 16 |
| B | 28.8 | 10.8 | 18 | 28.8 | 28.8 |
| C | 28 | 6 | 10 | 20 | 28 |
| D | 33.6 | 3.6 | 6 | 12 | 24 |
| Total | 106.4 | 32.4 | 50 | 76.8 | 96.8 |
Cases prevented:
| Community | 3μg | 5μg | 10μg | 20μg |
| A | 4 | none | none | none |
| B | 18 | 10.8 | none | none |
| C | 22 | 18 | 8 | none |
| D | 30 | 27.6 | 21.6 | 9.6 |
| Total | 74 | 56.4 | 29.6 | 9.6 |
(3) Benefits and costs are shown below in millions of dollars:
| Standard | 3μg | 5μg | 10μg | 20μg |
| Gross benefits | 518 | 395 | 207 | 67 |
| Cost | 792 | 472 | 206 | 77 |
| Net benefits | -274 | -77 | 1 | -10 |
The best policy is the 10μg standard, which is what EPA actually chose.