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Unformatted text preview: Econ 131 Problem Set 5 Part 2 The following questions are all relating to the following article: http://www.nytimes.com/2009/11/10/science/10patch.html?_r=2&hp This article is also in the Readings folder on the course WebCT site. 1. Assuming that all the plastic in the ocean is a byproduct of consuming some bundle of goods, X, can you develop a simple model that discusses where the market allocation is and where the social optimum is in this situation? Propose policy options to deal with this problem. (Hint: Feel free to make any simplifying assumption you would like as long as you deliver the main message.) 2. Assume that there is another bundle of goods, Y, the waste of which is biodegradable, but is much more expensive. Does this provide another policy option for the government? If yes, under what conditions would the policy in Question 1 be optimal compared to the policy proposed here. (Don't forget the role of the discount rate. What is an appropriate discount rate in YOUR opinion?) 3. Consumption is key to `growth'. How does this article show the other side of that growth, which is measured by GDP growth? What alternatives measures of growth would take the issues posed in this article into consideration? In light of the recession, would you recommend to your government to adopt these alternative measures or at least to consider them in addition to GDP growth? ...
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This note was uploaded on 12/09/2009 for the course ECON 131 taught by Professor Groves during the Fall '09 term at UCSD.
- Fall '09
- Environmental Economics