hm # 2 - y The typ i cal fi n ding(e.g f or SO2 is that for...

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AREC/ECON 478 spring 2009 HOMEWORK #2 2-PERIOD MODEL Solve the problem of the allocation of 200 units of a resources across two periods (1 and 2), when the two inverse demand curves for each period are: P 1 = 200 – Q 1 and P 2 = 220 –1.1Q 2 . Assume all of the resource must be used. Find the optimal allocation for the (a) no discounting case and (b) the 10% interest rate case. Also graph the solutions. Does the rate of resource use depend on the interest rate? 2. ECONOMIC GROWTH-DEVELOPMENT & THE ENVIRONMENT Many economists have studied the relationship between economic development (or economic growth) and environmental qualit
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Unformatted text preview: y . The typ i cal fi n ding (e.g., f or SO2) is that, for a cross-section of countries, there is a U-shaped curve that describes the relationship between per capita GDP and various measures of environmental quality. (A) Graph such a curve and offer an explanation for such a relationship. (B) How would you test your explanation with a different data set? (C) Across countries the data show that CO2 (a greenhouse gas) increases with per capita GDP. Graph this relationship and e xplain why CO2 does not show the same EKC relationship as we find in the case SO2?...
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