Exam 3 Economics

which of the following is an advantage of tradable pollution permits

the initial allocation of permits to firms does not affect the efficiency of the market

the efficient dynamic allocation of a depletable resource can by found by equating:

the present value of the marginal net benefits in both periods

tradable pollution permits

will be more valuable to firms that can reduce pollution only at high costs

54 57 54 62 67 68 66 73 82 86 82 91 107 108 107 111 the following table shows the marginal costs for each of four firms (A,B,C, and D) to eliminate units of pollution from their production processes. For example, for A to eliminate one unit of pollution, it would cost $54 and for firm A to eliminate a second unit of pollution it would cost an additional $67 if the government wanted to reduce pollution from 16 units to 6 units, which of the following fees per unit of pollution would achieve that goal?

$83

a dynamically efficient allocation of a depletable resource is one for which

.the present value of the marginal net benefits are equal across all periods .the sum of the area under the present value of the net benefit curve for each period is maximized.

54 57 54 62 67 68 66 73 82 86 82 91 107 108 107 111 the following table shows the marginal costs for each of four firms (A,B,C, and D) to eliminate units of pollution from their production processes. For example, for A to eliminate one unit of pollution, it would cost $54 and for firm A to eliminate a second unit of pollution it would cost an additional $67 if the government charged a fee of $83 per unit of pollution, how many units of pollution would the firms eliminate altogether

10

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what would be the efficient allocation of this resource in period 2?

19.62

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what is the efficient allocation of the resource in period 1?

20.38

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what is the marginal user cost associated with this resource in period 1?

4.81

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what is the marginal user cost associated with this resource in period 2?

5.19

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what would be the efficient price (WTP) in period 1?

5.81

assume society is trying to allocate 40 units of depletable resource across two time periods. Demand in both periods is given by the equation P = 16-0.5Q. the marginal cost (or marginal extraction cost) for the resource is constant at $1 per unit. the discount rate is 10%. what would be the efficient price (WTP) in period 2?

6.19

the difference between a corrective tax and a tradable pollution permit is that

a corrective tax sets the price of pollution and a permit sets the quantity of pollution

the sustainability criterion suggests that

at minimum, future generations should be no worse off than the current one

what is the primary difference between static and dynamic efficiency

dynamic efficiency involves situations where time is a crucial aspect

a corrective tax

places a price on the right to pollute

for a dynamic efficient allocation of resource to meet the sustainability criterion, which of the following must occur?

some sharing must take place from period 1 to period 2

if the present value of marginal net benefits (PVMNB) in two periods are equalized then which of the following must be true?

the area under period one and period two's PVMNB curves is maximized