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Questions from Previous Exams .docx - 1. All sources of...

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1.All sources of renewable energy are green, but some are more green than others. Hydro,for example, is green, however it has disproportionate effects on populations. Hydrocreates significant issues around the release of water and flood controls. Hydro alsoeffect natural eco systems as fish can be pumped downstream but can’t swim back upover the dam wall.2.Weitzman’s theory relates to uncertainty in emissions control costs. The theory states:oPrice based measures (emission fees) are preferred if there is uncertainty aboutthe optimal amount of ablation. This is when the MD curve is steeper than theMS curve.oQuantity based measures (cap n trade) are preferred if there is uncertainty aboutthe marginal cost of abatement. This is when the MS curve is steeper than theMD curve.Therefore, when there is uncertainty the relative slope of the MD curve and MS curvematters to determine which method has the smallest efficiency loss.3.Travel cost method is a revealed preferences study that is designed to infer the value ofan environmental good by observing the time and cost taken by individuals to visit theenvironmental good. Three challengesa)Lower bound estimate: It only observes a proportion of the value/benefitsindividuals received.b)Sampling bias from surveys used to collect travel cost informational data –this refers to the type of survey used and the associated responsesc)The travel cost method does not account for substitutes4.Congestion is an externality ofa)Increase petrol tax: would encourage people to use public transport but itpunishes those with lower budget constraint and therefore only the rich canafford to drive to work. This is unfair for those who do not have equal accessto public transportb)Similar to above this measure discriminates those with lower budgetconstraint and those who don’t have equal access to public transport.

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Term
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Professor
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Tags
Economics, researcher, Transaction cost, Ronald Coase, Revealed preference

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