Review_1 - Review Questions #1 The following are old exam...

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Review Questions #1 The following are old exam questions that we have provided to help you review the material from class in preparation for the exams. Please come to office hours if you have questions regarding the solutions. QUESTIONS: 3. ( 4 points ) In discussing the impacts of the Federal ethanol policy that requires a minimum percentage of ethanol in the U.S. fuel supply, a recent article in Science magazine wrote, “With rising corn prices farmers will replace most of the grain diverted from food and feed by ethanol because the demand for overall food and feed – as opposed to corn or any particular grain – is inelastic.” What is implied by the demand for corn being elastic? What is implied by the demand for overall food and feed being inelastic? Why might the elasticities differ? 4. Oil prices are at record highs – last Friday U.S. crude closed at $101.84 per barrel. While it is clear that oil production and consumption generate environmental externalities, in this question we ask you to focus only on market supply and demand – we deal with externalities later in the exam. a.
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This note was uploaded on 11/06/2008 for the course AEM 2500 taught by Professor Poe,g. during the Fall '07 term at Cornell University (Engineering School).

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Review_1 - Review Questions #1 The following are old exam...

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