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 = 300, MCA = 1400.
(b) Qp = 600 - 300 = 300.
(c) Qa = 200.
(d) Qa = 187.
(e) DWL = $756.
(b) B = 20/444,000; A = $48.65.
(f) The city should not sell the land.
(a) 15,300 among smokers, 5,040 among nonsmokers, 20,340 total.
(b),(c) Policy A: 10,170 fatalities averted; Policy B: 7,650 fatalities averted.
(d),(e) Policy A: benefits = $61B, cost = $90B, net loss of $29 billion; Policy B: benefits = $46B, cost = $27B, net gain of $19 billion.
(f) Policy B is better: Policy A costs more for the risk reduction it provides than the public is willing to pay per fatality avoided.
(a) Q = 13 square miles.
(b) SS = $169M.
(a) Without the backstop:
(b) With the backstop:
(c) Total amount produced from the backtstop: 175.
(d) Backstop will be used in period 2.
(a) MDC = $150
(b) Minimum price to induce exploration: $450
(c) Without exploration:
(d) With exploration:
(e) Amount found: 75
(f) Expected wells drilled: 125