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ECON3128/ECON6040 Practice Midterm Exam
发布时间：2022-11-15
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ECON3128/ECON6040 Practice Midterm Exam
Part One
MCQs
The MCQs in your mid-term will be similar to what you have seen in your quiz (covering all content from the first 6 weeks of the semester).
Short Answer Questions
Q1: Consider a fishery
(a). Explain why profits of individual fishers differ in open-access equilibrium and social optimal equilibrium?
(b). Explain why open-access equilibrium is inefficient using the concept of externality.
Q2: How is wage-risk analysis used to estimate the value ofa statistical life? What are potential problems with wage-risk analysis?
Part Two
Problem Solving
Q4. Suppose that a wood pulp mill is situated on a bank of the Murrumbidgee River. The private marginal cost and marginal benefits of producing wood pulp is given by the function
The production Y is measured in tons. For every ton of wood pulp production, the downstream Wagga Wagga community suffer $10 loss from the polluted water (all prices could be thought of as millions of dollars to be more realistic but for simplicity we just call it dollars)
(a) What is the profit-maximising output of wood pulp without any regulation? What is the social benefit maximising output of wood pulp?
(b) Draw a diagram illustrating the market. Remember to label everything: marginal cost (MC), marginal benefit (MB), social marginal cost (SMC) functions, name the axes and mark your answers to part (a).
(c) Calculate the net social benefit at profit-maximising output level without regulation and social benefit maximsing output level
(d) Name and discuss two solutions that can achieve social benefit maximising output level.
Q5 We are concerned with only two generations. The demand and supply functions for oil in the present generation are given by:
where Q is expressed in millions of barrels and P is the price per barrel. There is a total of 100 million barrels of the resource available.
(a) Draw a supply-and-demand graph showing the equilibrium price and quantity consumed in the current generation in the absence of any consideration of the future. Remember to label all axis, lines, and important intersections (equilibrium) in your graphs. Solve for the equilibrium price and quantity algebraically.
(b) Draw a graph showing the marginal net benefits from consumption in this period at all levels of consumption up to the equilibrium level. Express the marginal net benefit function algebraically.
(c) Suppose that the marginal net benefit function is expected to be the same for the next generation. The discount factor is 1/4. Calculate the efficient allocation of resources between the two generations and show this graphically. (You can extend your graph from part b. Again name axis and functions and mark the equilibrium.)
(d) What is the appropriate resource depletion tax in the first period?
