SOLUTIONS
AEM 25
0
0:
Environmental and Resource Economics
Fall
200
9
Homework 1
10 Points (2.0 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 and we were pretty lenient on grading answers.
An example of economics growth conflicting with ecological preservation can be
found in most any environmental issue, for example, endangered species.
There are many ways to grow in a sustainable way.
For example, we might adopt
sustainable forestry practices. Or, more to the point, as we will see later in the
course, the economic management of fisheries promotes a higher fish stock (i.e.
the number of fish in the ocean) than a “maximum sustainable yield” approach.
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"
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Derive an algebraic equation for the demand curve you graphed.
Note, fro
this problem we will used the linear formula Visits = intercept – slope*Price,
which is the demand equation.
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).
Let’s examine the movement in price from $0 to $10 (i.e. change in price
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 Fall '07
 POE,G.
 Supply And Demand, Mono Lake

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