review4

review4 - Review 4 EEP101/Econ 125 David Zilberman Climate...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Review 4 EEP101/Econ 125 David Zilberman
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Climate Change Suppose that rent per acre is a function of temperature. R=2T-0.1T 2 Country A has 5 acres of land with average annual temp. of 3°C, 10 acres with average annual temp. of 10°C, and 5 more acres with average annual temp. of 17°C. After climate change, temperature in all locations increases by 3°C. How will climate change affect the well-being of country A? Country B has 10 acres with average annual temp. of 7°C and 10 acres with average annual temp. of 12°C. Temperature also changes here by 3°C after climate change. What is the impact of climate change on country B?
Background image of page 2
Answer: Recall R=2T-0.1T 2 , Temp. Rises by 3°C. Acres (A) Initial Temp. Rent Before Rent After 5 3 5.1 25.5 9.4 47 10 10 10 100 9.1 91 5 17 5.1 25.5 0 0 20 151 138 Acres (B) Initial Temp. Rent Before Rent After 10 7 9.1 91 10 100 10 15 7.5 75 3.6 36 20 187 136
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Climate Change (cont.) What will happen if a country has 10 acres with average annual temperature of 2ºC and 10 acres with average annual temperature of 8ºC? Explain. Acres (C) Initial Temp. Rent Before Rent After 10 2 3.6 36 7.5 75 10 8 9.6 96 9.9 99 20 132 174 So, some countries stand to gain from climate change.
Background image of page 4
Biofuels The price per gallon of gas at the pump is 0.05 times the price of a barrel of oil. A bushel of corn costs $2 to produce and makes 2 gallons of ethanol. But, the farmer receives only 40% of the retail price of ethanol. Ethanol is a perfect substitute for pump gas. A) If the price of a bushel of corn (sold as corn) is $1.50, and
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 11

review4 - Review 4 EEP101/Econ 125 David Zilberman Climate...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online