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ACE 411 Final

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(conserve, conserve)

Two cattle herders in Mongolia share a common grazing pasture. Because the grazing pasture is a common pool resource, each is tempted to allow his cattle to graze longer than he should, endangering the health of the pasture. Assume the following initial payoffs: If both conserve, then both earn 80. If both over-use the pasture, then both earn 70. However, if one herder conserves while the other over-uses, then the conserver earns 65 while the over-user (abuser!) earns 100. Refer to the scenario described in question 16. Which strategy profile(s) is/are pareto optimal (check all that apply)?

(conserve, conserve) (over-use, over-use) (conserve, over-use) (over-use, conserve)

Two cattle herders in Mongolia share a common grazing pasture. Because the grazing pasture is a common pool resource, each is tempted to allow his cattle to graze longer than he should, endangering the health of the pasture. Assume the following initial payoffs: If both conserve, then both earn 80. If both over-use the pasture, then both earn 70. However, if one herder conserves while the other over-uses, then the conserver earns 65 while the over-user (abuser!) earns 100. Suppose the community recently employed a young boy to monitor the commons. The boy is 100% effective at catching mischievious herders. Anyone caught over-using the pasture must pay a 10 unit fine (replace the fine from the previous question with this one). Now which strategy profile(s) is/are the Nash Equilibria? (check all that apply)

(conserve, over-use) (over-use, conserve)

Two pastoralists in southern Ethiopia are trying to decide if they should move their herd (go) to a particular watering hole 30 miles away, or stay. The watering hole has a capacity to support and strengthen one herd, but not two. If one herd utilizes the watering hole (but the other does not) that herd increases in value - we'll call this a payoff of 3. In this situation the herd who remained behind is now, relatively speaking, less marketable - translating into a payoff of 0. If neither utilize the resource, their herds remain stable in value (and equal) - we'll call this a payoff of 1. If they both go, there isn't enough water to sustain both herds, some livestock will be lost, and the herd value for each pastoralist will decline - we'll call this a payoff of -1. In this example, the herders have identical payoffs, but we'll refer to player 1 as the Borana pastoralist, and player 2 as the Gabra pastoralist. Which strategy profile(s) is/are Nash Equilibria? (check all that apply)

(go, stay) (stay, go)

Two fishermen on the shores of Lake Victoria in Uganda are deciding how much to fish this season - they can both fish intensely or lazily. They are the only fishermen to supply to the local market, so their joint supply affects local prices. One fisherman has a bigger boat than the other. If the fisherman with the big boat fishes intensely while the small boat fisherman fishes lazily, the big boat fisherman will earn $50 per week and the lazy small boat earns $0. On the contrary, if the fisherman with the big boat fishes lazily while the small boat fisherman fishes intensely the lazy big boat fisherman will earn $10 per week while the intense small boat fisherman earns $30. If both fish lazily, the big boat fisherman will earn $30 per week while the small boat fisherman earns $20. Finally, if both fish intensely, the big boat fisherman will earn $20 per week while the small boat fisherman earns $10. To ensure we are talking about the same strategy profiles, consider the "big boat" fisherman as player 1, and the "little boat" fisherman as player 2. Which strategy profile(s) is/are Nash Equilibria? (check all that apply)

(intensely, intensely)

(lazily, lazily) (intensely, lazily) (lazily, intensely)

Two cattle herders in Mongolia share a common grazing pasture. Because the grazing pasture is a common pool resource, each is tempted to allow his cattle to graze longer than he should, endangering the health of the pasture. Assume the following initial payoffs: If both conserve, then both earn 80. If both over-use the pasture, then both earn 70. However, if one herder conserves while the other over-uses, then the conserver earns 65 while the over-user (abuser!) earns 100. Suppose the community recently employed a young boy to monitor the commons. The boy is 100% effective at catching mischievious herders. Anyone caught over-using the pasture must pay a 5 unit fine. Incorporate this fine into the initial payoffs provided. Now which strategy profile(s) is/are the Nash Equilibria? (check all that apply)

(over-use, over-use)

(overfish, overfish)

Two fisherman fish from the same common pool resource. They are trying to determine if they should fish "light" or "overfish." If both fish light, they each earn 100. If both overfish, a tragedy of the commons ensues and each earn 80. If one overfishes while the other does not, the overfishing fisherman earns 200, while the light fisherman earns only 40. What is the Nash equilibria? (check all that apply). To avoid the tragedy of the commons, the fisherman agree to a set of internal rules. Adjust the original payoffs as follows: Each fisherman will pay 10 units to hire a monitor, but they are only responsible for making this payment when no one overfishes. If the monitor catches a fisherman overfishing, the overfisher loses 30 (which goes to paying the monitor and then into a public fund for preserving the resource). Assume the monitor is 100% effective at monitoring, and not corrupt. What is the Nash equilibrium?

(overfish, overfish)

Suppose Peter has been pulled over for a minor traffic violation. The officer issues him a ticket for $100. Peter could pay the ticket (in which case he loses $100), or he could offer the police officer a bribe of $50. If the officer accepts the bribe, then Peter of course loses -$50, but if the officer refuses the bribe then Peter owes $100 for the parking ticket plus $500 after being charged for bribery. The police officer's payoffs are $50 if he accepts the bribe and $200 if he refuses it. The officer's payoff is also $200 in the event that no bribe is offered. Use dynamic game analysis to determine the Nash equilibria? (check all that apply)

(pay ticket, refuse bribe)

(stay, stay) (go, stay) (stay, go)

Of the 47.9 million people living in Kenya, approximately 16 million live on less than $1.90/day. Calculate the poverty headcount for Kenya using the standard global poverty line. (Round your answer to the nearest hundredth.)

0.33

In the history of economic growth and development theory described in this module, there were three prominent generalized approaches to thinking about development. Place each of these key ideas in chronological order, beginning with the oldest (that is, the oldest idea = 1 and the most recent approach = 3).

1. get the planning right 2. get the prices right 3. get the incentives right

Today, roughly what percentage of the global population lives in extreme poverty?

10%

The poverty headcount in the Philippines is 0.166. 106.7 million people live in the Philippines. Using these numbers, calculate how many people in the Philippines live below the poverty line? (Numeric answer required.)

17,700,000

The Era of Modern Economic Growth began approximately when?

1750

Estimates suggest the Earth's surface temperature has risen approximately how much since 1900?

2 degrees Fahrenheit

Suppose the student average test score in a sample is 75. 300 individuals from the sample are randomly allocated a free laptop to support their education, while another 300 individuals are not. After the program, the average test score among those given a free laptop is 85, while those who did not receive the laptop earned an average score of 81. What is the estimated impact of the laptop on test scores?

4 points

According to Banerjee and Duflo (2007) poor households on average spend approximately what share of their income on food?

51-75%

What percentage of people living in extreme poverty work in agriculture?

65%

Approximately what percentage of people living in extreme poverty live in rural areas?

80%

Access to safe drinking water is most restricted on what continent?

Africa

Today, more than half of the global poor live on what continent?

Africa

Which continent saw the highest fatality rates due to famine during the last 40 years?

Africa

Which of the following answer choices best describes a Nash equilibrium?

An outcome from which neither player would want to deviate, taking the other player's behavior as given

30 years ago, more than half of the global poor live on what continent?

Asia

Which of the following best describes Jeff Sachs' solution to "getting the institutions right"?

Big push

Which country leads the world in terms of global forest losses?

Brazil

What is the externality in the cashmere example presented in the videos?

Cashmere-producing goats create dust that lowers air quality in the U.S.

What theorem suggests that private bargaining will overcome externalities, without the need for government intervention, regardless of how property rights are allocated, when transaction costs are negligible?

Coase Theorem

China's Air Pollution Action Plan are primarily an example of what kind of policy? (check all that apply)

Command and control

Which of the following best describes the Institutions Hypothesis?

Countries with better "institutions," more secure property rights, and less distortionary policies will invest more in physical and human capital, and will use these factors more efficiently to achieve a greater level of income.

What theory supports this claim discussed by Jha and Whalley (2001), "The experience of developed countries would seem to indicate that they should adopt few environmental controls and that with income growth environmental quality will improve."

Environmental Kuznets Curve

A forest is considered to be a carbon sink if it releases more carbon than it absorbs.

False

A reduction in transaction costs always turns a nontradable into a tradable.

False

A tax that is bigger than the marginal damages at the economically efficient level of production will be economically efficient.

False

A top-down example of institutional change is when the local population demands access to clean water and basic sanitation, and successfully lobbies their local leadership to provide it.

False

Access to clean fuels is positively correlated with deaths due to indoor air pollution.

False

According to Graff Zivin and Neidell (2013), there is little scientific evidence that pollution negatively affects human capital.

False

According to the Economist magazine, China's Air Pollution Action Plan was a dismal failure, providing evidence that command and control policies never work.

False

All economists agree that GDP growth is sufficient for reducing poverty.

False

All institutions are good for society

False

An informal credit market has only existed for the past 200 years

False

Asia as a whole now accounts for around 25% of annual global greenhouse gas emissions.

False

Backward induction means you solve the game beginning with the decision-maker who makes the first decision, followed by the second decision-maker, and so on until you end with the final decision node.

False

Basis risk arises when the index is not highly correlated with an individual's realized losses.

False

Castells-Quintana et al. argue that reductions in vulnerability through migration of the poor is more important than efforts to make existing locations, livelihoods and forms of production more resilient to climate risk.

False

Chronic poverty describes a situation of temporary poverty, often resulting from exposure to a negative shock.

False

Consumer protection issues are unlikely to be an important issue for digital credit products.

False

Correlation and causation are two terms that mean the same thing

False

Credit markets are only important if a poverty trap exists.

False

Dasgupta et al. (2002) predict the most likely scenario is for worse environmental outcomes in the long run.

False

Deforestation almost never leads to soil erosion.

False

Demand for microcredit is universally high, highlighting the importance of credit market failure.

False

Elinor Ostrom argued that the tragedy of the commons cannot be avoided.

False

Environmental goods rarely suffer from a lack of property rights.

False

Ex ante risk management strategies are almost always more costly than ex post risk coping behaviors.

False

For a 5% price increase, quantity supplied will increase proportionally more under inelastic supply than elastic supply.

False

Given current emissions, mitigation by countries in Africa will make a substantial difference.

False

Greenhouse gas emissions are local, so collective action is not useful.

False

Historically, countries with a higher share of primary exports have had higher growth rates,on average, than countries with a lower share.

False

If people act in their own self-interest, then we should not expect to observe an outcome unless it is pareto optimal.

False

In 2019, less than 50% of the population living in China were exposed to outdoor air pollution above World Health Organization's recommendations.

False

In Duflo's Ted Talk, she suggests deworming children is a too expensive and not very effective as a solution for fighting global poverty.

False

In Indonesia, the threat of an audit in road construction projects increased missing expenditures rendering these audits ineffective.

False

In every country in Africa, at least 50% of the population lives in extreme poverty.

False

In the case of a postive externality, marginal costs to society exceed marginal benefits

False

In the case of tradables (as opposed to nontradables), people voluntarily choose to participate in market exchanges.

False

In the last five years, fewer forested areas have been cleared, providing global evidence that deforestation is steadily declining.

False

It is not necessary to worry about freshwater withdrawals because water is a renewable resource.

False

Kraay and McKenzie (2014) present strong empirical evidence of macro-economic poverty traps.

False

Less than half of income earned by poor households in developing countries depends on agriculture (crops or livestock), forests, or other non-forest environmental sources.

False

Marketable permits work well for small individual sources of pollution.

False

Microcredit is uncontroversially a success story in development.

False

Most forests are cleared for timber to be used in construction materials or for paper.

False

Natural resources are a necessary condition for growth.

False

Norway's Oil Fund provides an example of the natural resource curse.

False

One benefit of payments for ecosystem service programs is that they can be easily implemented even when property rights are not well established.

False

Payments for ecosystem services encourage fewer environmental negative externalities

False

Poverty trap theory predicts that policies that facilitate migration are likely to deepen persistent poverty.

False

Private Coasian solutions such as collective bargaining by individuals is likely to be effective solution for combatting climate change because transaction costs are low.

False

Productive efficiency is rarely achieved in the long run under perfect competition.

False

Ronald Coase argued that regulation is always necessary in the case of weak institutions.

False

Rotating savings and credit associations are a new innovative financial market solution that has become popular only in the past decade and is not yet widespread.

False

The Economist article on "Climate change policies" argues in favor of banning fossil-fuel-powered airplanes.

False

The World Health Organization encourages the use of solid fuels and kerosene for indoor cooking

False

The available long-run evidence shows that in the past, only a small percentage of the population enjoyed living conditions that would be described as 'extreme poverty' today.

False

The benefits of climate change mitigation are well known, with very little uncertainty.

False

The causal determinants of development are now fully understood.

False

The environment and natural resources played a minor role in the Industrial Revolution.

False

The pollution haven hypothesis argues that firms will seek to avoid the cost of stringent environmental regulations by locating production in countries where environmental norms are laxer.

False

The social optimum always completely eliminates the externality.

False

The social optimum always determines a just and fair allocation of gains and losses.

False

There are very few sources of greenhouse gas emissions, which makes the problem more manageable for policymakers.

False

When considering endogeneity issues, it turns out that there is limited evidence that pollution leads to poor health outcomes.

False

With marketable permits we can expect that a firm that can reduce pollution (abate) at lower cost will actually pollute more than a firm that can only reduce pollution (abate) at high cost.

False

ir pollution in China is a problem that only affects the local population living in China.

False

Which of the following poverty measures accounts for extremes (how far below the poverty line one's income is)?

Foster Greer Thorbecke

Mexico's payments for ecosystems services program are an example of what kind of policy?

Government market-based solution

Rich countries have historically contributed most climate change, AND they are predicted to feel the effects of climate change the most.

Greenhouse gas emissions are rival and nonexcludable

Which of the following best describes moral hazard?

Hidden behavior between buyers and sellers

Which of the following best explains why the global poor are likely to be significantly affected by climate change?

High exposure to the effects of climate change High vulnerability to the effects of climate change Barriers to adaptation to climate change all of the above

Which of the following describes diminishing marginal utility?

I benefit from consuming more, but the benefits are smaller and smaller the more I consume.

What does the First Fundamental Theorem of Welfare Economics state?

If a market is in equilibrium under perfect competition then no one person could be made better off without making another person worse off.

Which of the following is demonstrated by figure 7.1 in Jha and Whalley (2001)?

If the abatement costs vary by country, then equivalent levels of abatement do not imply equivalent welfare gains.

Adam Smith wrote "An inquiry into the nature and causes of the Wealth of Nations" during which period?

Industrial Revolution

Which of the following is an accurate characterization of credit markets in developing countries?

Informal credit is common

When a poor household borrows to buy food during a drought, this is an example of using credit for what purpose?

Insurance

"Shida mwingi" translates to:

Many problems

Suppose an individual chooses to not use fertilizer because they know their crops are insured. This is an example of

Moral hazard

Where have Earth's surface temperature changes been largest?

Near the poles

Suppose a a household's average income in a small community called Ruaha is $1.80 per person per day. In neighboring Serengeti, per capita income is $1.90 per person per day. Suppose the government decides to provide a grant to improve the hospitals in Ruaha since it is poorer, but not in Serengeti. Afterwards, the government compares health outcomes in Ruaha and Serengeti. Is this an example of a randomized control trial?

The evidence regarding the Millennium Village Project suggests:

No impacts Big positive impacts on poverty Small impacts on health only The money was mostly lost due to corruption All of the above None of the above

Which of the following describes a reason why markets generally work well?

Participants engage in voluntary exchange

Which famous economist suggested that "in every society of the bottom billion there are people working for change, but usually they are defeated by the powerful internal forces stacked against them."

Paul Collier

According to the interview with Professor Jennifer Alix-Garcia, what kind of program(s) in Mexico helped to reduce deforestation? (check all that apply)

Payments for ecosystem services

Who is known for proposing the following supposition, "If it is in our power to prevent something very bad happening, without thereby sacrificing anything of comparable moral significance, we ought to do it."

Peter Singer

In the Economist article on "Climate change in Malawi," why does a Malawian official argue that "There is so much hypocrisy around climate change."

Poor countries, which have contributed the least to climate change, are likely to be most affected by the impacts of climate change.

Why is overcoming asymmetric information challenging in developing countries?

Poor regulatory frameworks Poor data infrastructure Households have few assets to use as collaterol Weak property rights all of the above

The Big Push is motivated by what economic model discussed in this class?

Poverty Trap Model

Suppose the world price of a good is above the local equilibrium price. If the local equilibrium price lies above the price producers receive in an outside market, after incorporating transaction costs, then what can we expect to happen?

Producers will not benefit from exporting, the market will remain in autarky, the good will be a nontradable.

The "Climate Change 101" Economist article stated, "If you reduce emissions and no one else does, you face roughly the same climate risk as before." This highlights what economic concept related to climate change?

Public goods

According to one study discussed in the "Climate Change and inequality" Economist article, where are the effects of climate change in the US likely to be most severe?

Southeast

Two fisherman fish from the same common pool resource. They are trying to determine if they should fish "light" or "overfish." If both fish light, they each earn 100. If both overfish, a tragedy of the commons ensues and each earn 80. If one overfishes while the other does not, the overfishing fisherman earns 200, while the light fisherman earns only 40. What is the Nash equilibria? (check all that apply). To avoid the tragedy of the commons, the fisherman agree to a new set of internal rules. Adjust the original payoffs as follows: Each fisherman will pay 10 units to hire a monitor (as in the previous question), and they are only responsible for making this payment when no one overfishes. If the monitor catches a fisherman overfishing, the overfisher is now charged a more hefty fine of 150 (which goes to paying the monitor and then into a public fund for preserving the resource). Assume the monitor is 100% effective at monitoring, and not corrupt. Which of the following statements is most true?

The Nash equilibrium is pareto optimal. This scheme avoids the tragedy of the commons.

The fine is not large enough to avoid the tragedy of the commons. The Nash equilibrium from the original scenario in question 21 remains unchanged.

In what ways are the Cambodian loans described in the August 2020 article in the Economist that you read for this week's discussion session dissimilar from a typical group-based microcredit loan described in this week's videos?

The loans described in the article are much bigger than a typical microcredit loan. The loans described in the article require collateral. Cambodia has a well functioning credit bureau (a nation-wide credit scoring system for reporting bad borrowers). all of the above

The historic decline in wild fish populations is an example of which of the following economic concepts?

Tragedy of the Commons

40% of people worldwide do not have access to clean cooking fuels.

True

A poverty trap is a mechanism that makes it difficult or even impossible for currently poor people to escape poverty.

True

A system of marketable permits sets a quota for the total allowable amount of the negative externality.

True

According to Banerjee and Duflo (2007) poor households are often very entrepreneurial.

True

According to Dasgupta et al. (2002), many critics have challenged the conventional environmental Kuznets curve.

True

According to Graff Zivin and Neidell (2013), pollution exposure is endogenous.

True

Acemoglu et al.'s seminal paper from 2001 exploits differences in settler mortality to determine the causal impact of institutions on economic growth.

True

An airport in Loiyangalani, Kenya could reduce transaction costs, potentially increasing market access to smallholder producers and consumers in the area.

True

China has more air pollution than is socially optimal because coal burning power plants or other industrial plants ignore negative externalities.

True

Countries with democratic governance structures rely less on primary exports, on average, than countries with more autocratic governance structures.

True

Covariate shocks like Covid-19 represent a major challenge for microfinance.

True

Critics of command and control policies often prefer market based instruments because they "internalize the externality."

True

Deaths from total air pollution in China has fallen steadily over the past two decades.

True

Forests can act as both carbon sources and sinks.

True

Forests play an important role in regulating the water cycle.

True

From 1900-2000, the US and Europe combined contributed to more than half of total global greenhouse gas emissions.

True

Graduation programs are an example of a Big Push program of development.

True

If players have some information regarding the decision of the other player, then the game is usually represented in extensive form.

True

In Duflo's Ted Talk, she interprets the results from a social experiment to suggest charities or governments should provide malaria bed nets for free in Africa

True

In Uganda, publishing information about government grants to school reduced corruption when locals began voicing complaints that funds were not reaching the local schools.

True

In a game with two strategies (run and walk) for player 1, run strictly dominates walk if the player is better off running no matter what the other player does.

True

Income is a strong determinant of energy access and types of fuel sources.

True

Inequality can negatively impact economic efficiency.

True

Lybbert et al. (2004) present strong empirical evidence of a micro-economic poverty trap.

True

Most of the gains in combatting air pollution in China since 1990 have been seen by reducing exposure to indoor air pollution (rather than outdoor air pollution)

True

Most scientists agree that the changing climate can be attributed to human behavior.

True

Nash equilibria can help us understand the incentive structures that lead to both good and bad outcomes when decisions are strategic.

True

Particulate matter exposure is high in many low-to-middle income countries across Africa and Asia.

True

People with low incomes are more likely to die in a natural disaster than people with higher incomes

True

Pigou suggested that an externality can be corrected by levying taxes equal to the externality costs.

True

Regulatory burdens can be a major barrier to entry to private firms in developing countries, reducing competition.

True

State-owned enterprises tend to be significant market participants in developing countries and benefit from market power.

True

The IPCC suggests that adaptation and mitigation efforts are complementary, and both will be necessary to minimize the negative effects of climate change.

True

The Industrial Revolution describes a period of remarkable technological advance from around 1750-1850.

True

The May 2020 Economist article on Microfinance and Covid-19 suggests that recent progress in global financial inclusion may be reversed due to Covid-19.

True

The Millennium Village Project provided aid which roughly doubled the size of the local economy.

True

The asset-based poverty trap model relies on an assumption that poor households do not have access to credit.

True

The asset-based poverty trap model reveals the importance of financial inclusion.

True

The counterfactual can be described as what would have happened to beneficiaries in the absence of the program.

True

The free market overproduces in the case of a negative externality.

True

The pollution haven hypothesis argues that firms will seek to avoid the cost of stringent environmental regulations by locating production in countries where environmental norms are laxer.

True

The revised EKC suggests countries today may be able to develop with fewer harmful environmental impacts than in the past.

True

The slope of the total cost curve (as a function of quantity) is the marginal cost of production.

True

The trust game highlights one reason why institutions, governance, and legal systems matter.

True

Theoretically, a Pigouvian tax will achieve the economically efficient outcome.

True

There exists a strong positive relationship between GNI per capita and the global competiveness index

True

There is strong causal evidence that children exposed to pollution are more likely to be absent from school.

True

To avoid exposure to risk, some poor households choose less productive activities.

True

Which of the following economic outcomes are associated with countries rich in natural resources? (check all that apply)

Violence High poverty headcount Food insecurity Abuse of human rights

Which of the following best describes the Micawber threshold?

a threshold below which households move toward a low welfare equilibrium, and above which households move toward a high welfare equilibrium

Why are financial markets often missing in developing countries?

adverse selection moral hazard difficulty of enforcing contracts all of the above

Markets are efficient if:

all costs and benefits are considered the market is competitive perfect information exists all of the above

Which of the following defines a famine?

an acute episode of extreme hunger that results in excess mortality due to starvation or hunger-induced diseases

Which of the following is an assumption of the Solow-Swan model?

an economy can combine labor and capital to produce GDP constant returns to scale technology is exogenous all of the above

What is the Law of Large Numbers?

as a sample increases in size, the sample average will grow closer and closer to the true population average

The "new toxics" framework suggests which of the following?

as older pollutants are cleaned up, new ones emerge, so that overall environmental impact is not reduced.

The market for "lemons" in the context of a used car illustrates which of the following concepts?

asymmetric information

Unsafe drinking water sources are likely to be contaminated by what?

bacteria viruses pollution parasites all of the above

Which of the following are the "three big ideas you already know" presented in this week's videos (check all that apply)

big push institutions market failures

Rotating savings and credit associations address adverse selection in what way(s)?

borrowers choose group members

Index-based livestock insurance addresses asymmetric information issues in what way(s)?

calculated predicted livestock mortality based on satellite imagery

What approach best describes the Professor Xin Zhang's methods for dealing with the counterfactual problem?

compared changes for the same individuals over time

Which of the following best explains why coordination failures arise in education?

complementarities

Information failure can cause which of the following to occur?

consumers under-invest consumer over-invest producers under-invest producers over-invest all of the above

In what way does agriculture contribute to development?

contributor to national economic activity income generation food security provider of environmental services all of the above

New digital credit products address asymmetric information issues in what way(s)?

data to predict credit worthiness

The August 2020 article in the Economist that you read for this week's discussion session describes a labor market shock in Cambodia due to Covid-19. How does the labor market shock described in the article affect garment workers in Cambodia? Assume there is no fixed wage.

demand for labor decreases, lowering wages, and workers are worse off

Jha and Whalley (2001) argue which of the following?

developing countries will need to tackle environmental problems more actively than industrial economies in the past

Two fishermen on the shores of Lake Victoria in Uganda are deciding how much to fish this season - they can both fish intensely or lazily. They are the only fishermen to supply to the local market, so their joint supply affects local prices. One fisherman has a bigger boat than the other. If the fisherman with the big boat fishes intensely while the small boat fisherman fishes lazily, the big boat fisherman will earn $50 per week and the lazy small boat earns $0. On the contrary, if the fisherman with the big boat fishes lazily while the small boat fisherman fishes intensely the lazy big boat fisherman will earn $10 per week while the intense small boat fisherman earns $30. If both fish lazily, the big boat fisherman will earn $30 per week while the small boat fisherman earns $20. Finally, if both fish intensely, the big boat fisherman will earn $20 per week while the small boat fisherman earns $10. To ensure we are talking about the same strategy profiles, consider the "big boat" fisherman as player 1, and the "little boat" fisherman as player 2. Which description best reflects the Nash equilibrium solution to this game?

each player will fish intensely, even though they would be better off if they collaborated and fished lazily

Which of the following is a policy conclusion one might draw based on the Environmental Kuznets Curve?

economic growth leads to better environmental quality in the long run

In causal inference, ______ is when there is something missing from your model, that is related to both your outcome variable and your causal variable of interest.

endogeneity

Which sector is the leading contributor to greenhouse gas emissions?

energy

Which of the following is an example of an environmental loss from agriculture?

eutrophication

Two fishermen on the shores of Lake Victoria in Uganda are deciding how much to fish this season - they can both fish intensely or lazily. They are the only fishermen to supply to the local market, so their joint supply affects local prices. One fisherman has a bigger boat than the other. If the fisherman with the big boat fishes intensely while the small boat fisherman fishes lazily, the big boat fisherman will earn $50 per week and the lazy small boat earns $0. On the contrary, if the fisherman with the big boat fishes lazily while the small boat fisherman fishes intensely the lazy big boat fisherman will earn $10 per week while the intense small boat fisherman earns $30. If both fish lazily, the big boat fisherman will earn $30 per week while the small boat fisherman earns $20. Finally, if both fish intensely, the big boat fisherman will earn $20 per week while the small boat fisherman earns $10. To ensure we are talking about the same strategy profiles, consider the "big boat" fisherman as player 1, and the "little boat" fisherman as player 2. What is the "big boat" fisherman's dominant strategy?

fish intensely

Two fishermen on the shores of Lake Victoria in Uganda are deciding how much to fish this season - they can both fish intensely or lazily. They are the only fishermen to supply to the local market, so their joint supply affects local prices. One fisherman has a bigger boat than the other. If the fisherman with the big boat fishes intensely while the small boat fisherman fishes lazily, the big boat fisherman will earn $50 per week and the lazy small boat earns $0. On the contrary, if the fisherman with the big boat fishes lazily while the small boat fisherman fishes intensely the lazy big boat fisherman will earn $10 per week while the intense small boat fisherman earns $30. If both fish lazily, the big boat fisherman will earn $30 per week while the small boat fisherman earns $20. Finally, if both fish intensely, the big boat fisherman will earn $20 per week while the small boat fisherman earns $10. To ensure we are talking about the same strategy profiles, consider the "big boat" fisherman as player 1, and the "little boat" fisherman as player 2. What is the "little boat" fisherman's dominant strategy?

fish intensely

William Easterly's bottom-up approach to institutional change relies heavily on which of the following?

free markets

Group-based microcredit addresses moral hazard in what way(s)?

group members monitor one another's actions

Undernourished children are more likely to:

have low levels of education become short adults have lower economic status in adulthood give birth to smaller infants all of the above

Which of the following refers to the "brain drain?"

highly educated individuals from low-education areas migrate to places where returns to education are high.

What do demand elasticities tell us?

how sensitive consumers are price changes

What do scientists primarily use to estimate long-term (over millennia) atmospheric concentration of CO2?

ice cores

Which of the following is a policy intervention identified by Castells-Quintana et al. to relax constraints on poor households' adaptation strategies?

improve infrastructure improve access to finance establish property rights all of the above

Which of the following is a key implication of the Endogenous Growth model?

improve technology increase investment in human capital expect knowledge spillovers all of the above

If you raise the poverty line, it is always the case that the poverty headcount for a given country will:

increase

Which of the following is a key implication of the Solow-Swan model?

increase the rate of savings

Lack of access to a safe drinking water source is a leading risk factor for which of the following?

infectious disease and malnutrition

Acemoglu et al.'s seminal paper from 2001 argues which of the following is the MOST important driver of economic growth?

institutions

Which of the following accurately characterizes Acemoglu and Robinson's thoughts on institutions?

institutions are persistent

Informal moneylenders typically address asymmetric information issues in what way(s)?

local "insider information" to screen, monitor, and enforce

The US Acid Rain program is an example of what kind of solution?

marketable permits

What kind of solution is used to "manage the commons" in Alaskan fisheries?

marketable permits

Which of the following are examples of public externalities provided by forests? (check all that apply)

natural habitat for wildlife carbon sequestration biodiversity soil management

The poverty headcount is _______ correlated with educational attainment.

negatively

In the fisheries example given in the interview with Professor Jennifer Meredith, which of the following key assumptions of the Coase Theorem were violated? (check all that apply)

negligible transaction costs

Two pastoralists in southern Ethiopia are trying to decide if they should move their herd (go) to a particular watering hole 30 miles away, or stay. The watering hole has a capacity to support and strengthen one herd, but not two. If one herd utilizes the watering hole (but the other does not) that herd increases in value - we'll call this a payoff of 3. In this situation the herd who remained behind is now, relatively speaking, less marketable - translating into a payoff of 0. If neither utilize the resource, their herds remain stable in value (and equal) - we'll call this a payoff of 1. If they both go, there isn't enough water to sustain both herds, some livestock will be lost, and the herd value for each pastoralist will decline - we'll call this a payoff of -1. In this example, the herders have identical payoffs, but we'll refer to player 1 as the Borana pastoralist, and player 2 as the Gabra pastoralist. What is the Borana pastoralist's strictly dominant strategy?

no strictly dominant strategy exists

Two pastoralists in southern Ethiopia are trying to decide if they should move their herd (go) to a particular watering hole 30 miles away, or stay. The watering hole has a capacity to support and strengthen one herd, but not two. If one herd utilizes the watering hole (but the other does not) that herd increases in value - we'll call this a payoff of 3. In this situation the herd who remained behind is now, relatively speaking, less marketable - translating into a payoff of 0. If neither utilize the resource, their herds remain stable in value (and equal) - we'll call this a payoff of 1. If they both go, there isn't enough water to sustain both herds, some livestock will be lost, and the herd value for each pastoralist will decline - we'll call this a payoff of -1. In this example, the herders have identical payoffs, but we'll refer to player 1 as the Borana pastoralist, and player 2 as the Gabra pastoralist. What is the Borana pastoralist's weakly dominant strategy?

no weakly dominant strategy exists

Which of the following shapes economic incentives?

one's expectations about the behavior of others the institutional framework within which one operates the rewards that accrue from different activities all of the above

The US Conservation Reserve Program is an example of what kind of solution?

payments for ecosystem services

The Millennium Village Project focused on which kind of capital for development?

physical human financial natural all of the above

The IPCC suggests what population is most vulnerable to climate change?

poor disadvantaged populations

GDP is _______ correlated with access to improved sanitation facilities.

positively

The poverty headcount is _______ correlated with the prevalence of underweight children (stunting).

positively

Which of the following is a barrier to adaptation for poor households identified by Castells-Quintana et al.?

problems accessing financial resources informational and institutional barriers inadequate infrastructure all of the above

Trade theory (ignoring the environmental externality) suggests that if US firms relocate to Guatemala, in pursuit of more lax environmental standards, then which of the following is true? (check all that apply)

producers in Guatemala gain consumers in the US gain

The "race to the bottom" hypothesis argues which of the following?

producers in countries with strict environmental standards will demand less environmental regulation.

Which of the following describes producer surplus?

producers' gains from trade difference between the price producers receive and the price they are willing to sell it at total value of production minus the total cost of production to producers all of the above

Which of the following best describes the "Big Push" in the context of a poverty trap?

providing poor households with substantial capital

According to Graff Zivin and Neidell (2013), which of the following is a contribution made by economists to the literature exploring the relationship between pollution and health?

recognized how optimizing behavior can bias estimates of the relationship between pollution and health considered impacts on not only health but also human capital. unpacked the difference between biological and behavioral impacts of pollution on health all of the above

Prior to 1750, how is the trend in world GDP best described?

relatively constant

How do institutions in the U.S. deal with the factors inhibiting the development of credit markets in developing countries?

require collaterol credit reporting systems threaten ability to attain future loans all of the above

What is an example of an endogeneity problem for causal inference of the impact of pollution on health?

residential sorting individuals may choose to avoid toxic exposure individuals choose where to live all of the above

In what context is empirical evidence of poverty traps strongest?

rural, remote regions

Which of the following is an example of an environmental benefit from agriculture?

sequestering carbon

Since 1750, how is the trend in world GDP best described?

steadily increasing at an increasing rate

Which of the following are key assumptions of the Coase Theorem? (check all that apply)

strong property rights negligible transaction costs

Which of the following is an assumption of the Endogenous Growth model?

technology is endogenous

Which of the following describes the concept of marginal utility?

the first derivative of the utility function with respect to quantity consumed the demand curve it is always positive and decreasing all of the above

When the "world price" of a good falls below the local equilibrium price, what does trade theory predict?

the gains to consumers exceed the gains to producers.

Dutch disease occurs when which of the following lead to a shrinking of the manufacturing sector? (check all that apply)

the value of domestic currency appreciates the domestic country experiences a rapid influx of foreign exchange domestic prices increase

"Get the prices right" best reflects which of the following ideas?

trusting markets more than government

How does randomization create a reliable counterfactual?

two (or more) randomly chosen groups, when large enough, are comparable due to the Law of Large Numbers

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