HW 1 A - SOLUTIONS AEM 250 Environmental and Resource...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
SOLUTIONS AEM 250: Environmental and Resource Economics Homework 1 Distributed: Feb 2, 2007, Due by end of class on Feb. 9, 2007 10 Points (2.5 points per question). All graphs should be clearly labeled and all other work legible. If we are unable to interpret your work, you will receive a lower score. 1. This is a subjective question. Please see the accompanying PDF file for examples of exemplary answers to this question. (Available in a few days.) 2. a. Graph the demand for visits to Mono Lake. Note that “demand” is formally quantity as a function of price. However, you may find it easier (as I did in creating the graph below) to map price as a function of quantity, which is technically called the inverse demand or the marginal benefit function. Demand for Visits to Mono Lake 0 10 20 30 40 50 60 70 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 Visits "Price" b. Derive an algebraic equation for the demand curve you graphed. Note, that The linear formula I gave you (Visits = intercept – slope*Price) is the demand equation, while the graph (which is the marginal benefits function) can be obtained as follows. By inspection of the above graph, the “visits” intercept is 180,000. The “slope” in this case is the (decrease in visits)/(increase in price per visit).
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Let’s examine the movement in price from $0 to $10 (i.e. change in price = $10). For this change the quantity demanded falls from 180,000 to 150,000 visits. Hence, our slope will be (-)30,000/10 = (-)3,000. That is, for every $1 increase in price, visits will decline by 3,000.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern