Previous Exams

Fall 2012 Exam 2 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) Qa = 300, MCA = 1400.

(b) Qp = 600 - 300 = 300.

(c) Qa = 200.

(d) Qa = 187.

(e) DWL = $756.

Question 2

(a)  636

(b) B = 20/444,000; A = $48.65.

(c) $26.3M

(d) $36.3M

(e) $67.9M

(f) The city should not sell the land.

Question 3

(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.  

Question 4

(a) Q = 13 square miles.

(b) SS = $169M.

Question 5

(a) Without the backstop:

 Period MEC 
100  300  400  100 
200  250  450  275 
400  200  600  400 

(b) With the backstop:

 Period MEC 
50  300  350  125 
100  250  350  325 
200  200  400  500 

(c) Total amount produced from the backtstop: 175.

(d) Backstop will be used in period 2.

Question 6

(a) MDC = $150

(b) Minimum price to induce exploration: $450

(c) Without exploration:

Period R MEC P Q
0 100 300 400 400
1 200 300 500 1100

(d) With exploration:

Period R MEC P Q
0 75 300 375 425
1 150 300 450 1150

(e) Amount found: 75

(f) Expected wells drilled: 125

 

 

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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 12/20/2012