mid1 - Economics 290 Canadian Microeconomic Policy...

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Economics 290: Canadian Microeconomic Policy Midterm #1 June 7, 2006 Instructions: (1) There are 5 questions in this exam. (2) Please limit your answer to the space provided below each question. (3) Please keep your answer short, and clarity will be rewarded. (4) Explain your answers and show how you got them. N a m e : Student Number: Tutorial Section: 1
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1. [6 points] PM Stephen Harper asked his aids to calculate the total social benefits and the total social costs of national defense. They found that the total social benefits of national defense exceed the total social costs. Does this imply that the funding to the Department of National Defense should be increased to achieve efficiency? Why or why not? 2. [20 points] Bill G. bought a piece of land and plans to build an airport for personal use. His benefit from each flight per day is given by MB = 400. His marginal cost is MPC = 20F, where F is number of flights per day. Unfortunately, the airport will be located next to Adam’s house, and the sound of each flight brings him a negative utility (in monetary
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This note was uploaded on 10/12/2009 for the course ECON 290 taught by Professor J liu during the Fall '06 term at Simon Fraser.

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mid1 - Economics 290 Canadian Microeconomic Policy...

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