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=1000; MCA=$800.
(b) Permits to each firm: Qp1=200; Qp2=800.
(f) Firm 1 buys 300 permits from 2; value is $300,000.
(b) Qp=550; also, Pw was set to $750 (the MCA).
(d) Qp=670 (demand hits the horizontal part of the supply curve); as a result, Qat would be 800-670=130.
(b) A=49, B=-0.0005.
(c) CS=$2.401 M.
(d) Total benefit=$4.901 M.
(e) Expected PV=$15.909 M
(f) The city should not sell the land.
(a) Cases now=45 per year.
(b) Prevented cases per year: L=1.25, M=24.5, H=4.25.
(c) NPV of each policy: L=-$300 M, M=$160M, H=$140M.
(d) Adopt M and H.
(e) Cases prevented: 28.75 per year.
(a) Results without the backstop:
(b) Results with the backstop:
(c) Backstop quantity=570.
(d) Period 2.
(a) Area A will be explored; the MC of new reserves will be $400.
(b) P=$400; R=$200; Q consumed=550.
(c) Q found by exploration=250.
(d) Expected wells=125.