Download ECON 2J03 - Environmental Economics – Midterm EXAM_ 2025/26. and more Exams Environmental Economics in PDF only on Docsity!
ECON 2J03 - Environmental Economics – Midterm EXAM_ 2025/26.
Resources devoted to monitoring the behaviour of firms,
agencies, and individuals subject to environmental
regulations are called.
Question 1 options: a) abatement costs b) enforcement costs
Suppose a manufacturing firm that is about to be regulated
faces the following actual and potential production costs: 1)
$2,500 before regulation; 2) $2,925 in the future without
the regulation; and 3) $3,240 in the future with the
regulation. The before/after cost of the regulation is
and the with/without cost of the regulation is.
a) $425; $ b) $425; $ c) $740; $
When environmental regulation of an entire industry results
in output adjustments, the social cost of the regulation can
be measured by the changes in consumer and producer
surpluses.
True
When supply and demand are linear curves, the incidence of
the tax depends on the slopes of the demand and supply
curves.
True
Refer to Table below. If the with/without principle were
applied to estimate the change in cost due to a new
environmental regulation, the added costs due to the new
regulation would be.
Production costs before the regulation $ 200 Production costs in the future, without the regulation $ 250 Production costs in the future, with the regulation $ 290 Question 5 options: a) $ b) $
Enforcement costs for new protective programs include
Question 6 options: a) resources devoted to monitoring the behavior of firms.
Refer to the Figure below. Panel (a) and Panel (b)
represent industries that have experienced cost increases
due to environmental regulations. Assume that both price
increases are equivalent. Which panel reflects less impact
on the consumer and a large industry adjustment, in terms
of less output?
Question 8 options: a) p 2 x r1. b) (d + e + f).
The change in consumer surplus resulting from an increase
in environmental quality (a public good) can be measured in
the same way as the change in consumer surplus for a
private good
Question 9 options: True
The practice of estimating willingness to accept
Question 10 options: a) asks how much compensation people require for a reduction in environmental quality.
For a firm with more than one source of emissions, the
states that the total costs of abating a given
abatement target will be minimized when the marginal
costs of abatement are across sources.
Question 11 options:
The height of the marginal damage curve at a particular
level of emissions shows how much total damages change if
there is a small change in the quantity of emissions.
Question 12 options:
Refer to Figure below. Total damages associated with
damage curve MD 2 at an emissions level of e 1 is.
Question 13 options: a) $ b) area a c) area b a) equimarginal principle; equalized True d) area a + b
Question 17 options: a) 0 b) 48 units c) $ 192.
Low-phosphate detergents, mercury-free thermometers and
energy-efficient appliances are all examples of.
Question 18 options: a) pollution-intensive goods b) low-carbon goods c) environmentally friendly goods
A living resource can become non-renewable if the rate of
harvest exceeds the growth rate of the resource's stock.
Question 19 options: True
Economists believe people pollute because
Question 20 options: a) people don't care b) people have too many options for their time c) governments are filled with corruption d) pollution is the cheapest waste disposal method of waste products
Climate change models have predicted an increase in the
earth's temperature, greater climate variability and more
extreme weather events in the 21 st^ century if greenhouse
gas emissions from human activity continue to be emitted
at their current pace.
Question 21 options:
Many environmental issues are local or regional; however,
some are international or global in scope. An example of a
global environmental issue is.
Question 22 options: a) destruction of the stratospheric zone b) greenhouse gases c) global warming
Positive economics is the study of.
Question 23 options: a) what will be b) what is c) beneficial economic outcomes
What are some of the issues with Hedonic estimation?
Question 24 options: a) Distortion of housing markets and prices due to too few sales b) It is not easy to measure environmental quality c) Environmental quality is a subjective matter
In surveys and experimental work where people are asked
to compare gains and losses relative to a reference point,
True d) all of the above d) economic outcomes that are most likely d) all of the above
In scenario that tax does not exist, 180 - 2Qd =40+2Qs Thus, Q=35, Pc=Pp= In scenario that tax exists, 180 - 2Q- 40 - 2Q = 8, Thus, Q = 33, Pc = 180 - 233 = 114, Pp = 40 + 233 = 106 We can calculate that incidence on consumers is 114 - 110 = And incidence on producers is 110 - 106 = 4
The following equations represent the inverse supply and demand
functions in the market for Good A:
PC = 160 - 3QD PP = 20 + 2QS
where PC and PP are the prices paid by consumers and received by
producers respectively. QD and QS are the quantities demanded and
supplied, respectively. Suppose the government imposes a tax of $
per unit of Good A. What is the incidence of this tax on consumers
and producers?
when there is no tax, 160 - 3Qd=20+2Qs Q=28, Pc=Pp= when government imposes tax of $5, 160 - 3Qd- 20 - 2Qs=5, Q=27, Pc=160-327=79, Pp=20+227= Incidence of tax on consumers=79-76= incidence of tax on producers=76-74=
Assume reductions in the amount of ground level ozone
shift the marginal cost of producing alfalfa from MC 1 = 35 +
2QS to MC 2 = 35 + 0.5QS. Use the producer surplus to
estimate the maximum amount alfalfa producers would be
willing to pay for this improvement in the air quality if the
market price of alfalfa is $50/unit of output.
Before shift, 50=35+2Q, Q=7.5, producer surplus=0.5(50-35)7.5=56. After shift, 50=35+0.5Q, Q=30, producer surplus=0.5(50-35)30= The difference is the maximum amount alfalfa required by the question, which is 225 - 56.25=168.
Assume reductions in the amount of ground level ozone shift the
marginal cost of producing alfalfa from MC 1 = 30 + 2QS to MC 2 = 30
+ 0.5QS. Use the producer surplus to estimate the maximum amount
alfalfa producers would be willing to pay for this improvement in the
air quality if the market price of alfalfa is $40/unit of output.
if no shift, 30+2Qs=40, Q=5, producer surplus=0.5(40-30)5= if there is shift, 30+0.5Qs=40, Q=20, producer surplus=0.5(40-30)20= maximum amount producer willing to pay=100-25=
76 - 0.5Q=4+Q
Q=
socially efficient output: 76 - 0.5Q=4+Q+ Q=
Suppose there are three firms in the market for a certain
good. Firm 1's marginal cost equation is MC = 4 + 0.25QS,
firm 2's marginal cost equation is MC = 0.5QS and firm 3's
marginal cost equation is MC = 2 + QS. What is the
aggregate supply equation for this market?
Firm 1 can be rewritten to: Qs= 4P– 16 Firm 2: Qs=2P Firm 3: Qs=P– 2 aggregate supply equation for this market: Qs=7P– 18
Suppose there are three firms in the market for a certain good. Firm
1's marginal cost equation is MC = 6 + 0.5QS, firm 2's marginal cost
equation is MC = 0.25QS and firm 3's marginal cost equation is MC =
4 + QS. What is the aggregate supply equation for this market?
P=6+0.5Q - > Q = 2 P- 12
P=0.25Q - > Q=4P
- P=4+Q - > Q=P-
- aggregate supply equation: Qs=2P-12+4P+P-4=7P-
