PS2_spring2006 - EEP101/ECON125 Spring 2006 Problem Set 2...

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EEP101/ECON125 Spring 2006 Problem Set 2 (Due Thursday, March 2 in class) We encourage you to work together, but each person must submit his/ her own responses. PLEASE WRITE YOUR NAME, SID, AND SECTION NUMBER ON EACH PAGE. Question 1 True, false, or uncertain. Please answer and provide a SHORT explanation, correcting if false. (Please correct in a meaningful way, not by adding the word “not.”) a) If a policy maker is uncertain about the true demand curve, a tax is a preferred policy tool. b) The Coase theorem tells us that there is no reason to regulate externalities as long as property rights are clearly defined. Question 2 After listening to all the practical examples in class, you feel that it is time to go and employ what you learned in the real world. So you decide to quit university and become an orange farmer. You purchase a piece of land with beautiful orange trees, and now need to decide what technology to use to spray pesticide(x) against a common pest, the Asian citrus leafminer. You inherited a contract for aerial spaying (I=0) when buying
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This note was uploaded on 08/01/2008 for the course ECON 101 taught by Professor Wood during the Spring '07 term at University of California, Berkeley.

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PS2_spring2006 - EEP101/ECON125 Spring 2006 Problem Set 2...

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