ECN-115A 2007 final exam v3 KEY final

ECN-115A 2007 final exam v3 KEY final - Economics of...

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1 Economics of Development: Growth, Poverty Alleviation, and the Environment ARE/Economics 115-A Stephen A. Vosti Fall, 2007 Final Exam Please note that the following are suggested answers; other answers may be acceptable. Please write ALL your answers in your Blue Books. We will not be collecting the exam sheets, nor will anything appearing on these sheets be included in the grading process. Write legibly; you will receive no credit for answers we cannot read. Make sure your full name is on all the Blue Books you submit. For those submitting multiple Blue Books, please ‘nest’ them before submitting them. You have 120 minutes to complete this exam; all Blue Books must be submitted at the end of the exam period. The points associated with each question have been identified; use this information to organize your time. Do your own work; the Code of Academic Conduct printed on the cover of your Blue Books will be enforced. Boa sorte! 1. Concepts, Terms, and Definitions – (10 points total – 5 points per question) Select two of the following four sets of terms; define each term in each set you select and explain the interrelationships (if any exist) among the terms in each set. 1.a. Public goods, asymmetric information, environmental externalities, natural monopolies Public goods – products and services that often can be provided at very low marginal costs, but are difficult to charge users for, and are difficult to exclude non-paying users Asymmetric information – information about a product or service that is not available equally, and or at the same cost, to suppliers and consumers of that product or service Environmental externalities – the side-effects of given consumption or production activity on the natural resource base that are not included in the private calculation of costs or benefits Natural monopolies – products or services that face very large establishment costs and substantial declines in marginal costs as output is expanded Interrelationships – all of these represent rationales for public policy concern, and depending on the total (private and social) benefits and costs of intervention, may merit public policy action
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2 1.b. Quota, tariff, subsidy, WTO Quota – quantitative restrictions on the importation of a particular input or product Tariff – taxes imposed on imported inputs or products at a country’s border Subsidy – an amount paid to the producers of a specific input, product or service that lowers the cost of production of that input/product/service below what the free-market equilibrium price would be WTO – World Trade Organization Interrelationships – the WTO has as one if its mandates to eliminate barriers to international trade, with particular focus paid on quotas, tariffs and subsidies that distort production (and hence resource allocation) incentives 1.c. Deforestation, soil erosion, mineral depletion, adjusted net national savings Deforestation – the lost of forest cover, generally without replacement Soil erosion
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ECN-115A 2007 final exam v3 KEY final - Economics of...

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