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.
(a,b) Q = 75, P = $300,
(c,d) Q = 100, Psub = $200.
(e) Sub = $200.
(f) Total cost of subsidy = $20,000.
(g) Welfare gain = $1875.
(a) Qt = 4000.
(b) Tax = $50.
(c,d) Qai = 100, Qbi = 200.
(e,f) TCAai = $2500, TCAbi = $5000.
(g,h) Tax payments: type-A firm = $10,000; type-B firm = $0.
(a) Pp = $100.
(b,c,d) See table below.
| Firm | Initial Emissions | Qa | Qp | TCA | Target | Buy | Sell | Allocation |
| 1 | 400 | 200 | 200 | $10,000 | $20,000 | 100 | 0 | 100 |
| 2 | 600 | 200 | 400 | $10,000 | $20,000 | 100 | 0 | 300 |
| 3 | 800 | 400 | 400 | $20,000 | $0 | 0 | 200 | 600 |
| Total | 1800 | 800 | 1000 | $40,000 | $40,000 | 200 | 200 | 1000 |
(a) Qt = 600, MCA = $800.
(b) Qp1 = 600, Qp2 = 800.
(c) Qt = 500.
(d) DWL = $20,000.
(e) Pp = $1200.
(f) Source 1 will buy 100 permits from 2 for a total of $120,000.