EEP101_midtermreview

EEP101_midtermreview - Midterm Review Questions EEP...

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Unformatted text preview: Midterm Review Questions EEP 101/ECON 125 In cases where policymakers are uncertain about the demand for a pollution input: 1. Taxes are superior to direct control because they are more efficient. 2. Standards are superior if demand is elastic. 3. Taxes are superior if demand is elastic. 4. Standards are superior if demand is inelastic. Explain. In cases where policymakers are uncertain about the demand for a pollution input, standards are superior if demand is elastic. P Q E[MB] MSC Q* P* O A1 B1 A2 B2 A3 B3 A4 B4 DWL is higher for tax than for standard (Q*) since areas in red are higher than areas in green under both circum-stances of high and low MB In cases where policymakers are uncertain about the demand for a pollution input, taxes are superior if demand is inelastic. P Q E[MB] MSC Q* P* O A1 B1 A2 B2 A3 B3 A4 B4 DWL is higher for standard (Q*) than for tax since areas in green are larger than areas in red under both circumstances of high and low MB Willingness to pay, to ensure that peoples' offspring or future generations inherit a particular environmental asset, is: 1. Existence value 2. Bequest value 3. Nonuse value 4. Net present value Explain. B equest value: Willingness to pay, to ensure that peoples' offspring or future generations inherit a particular environmental asset. Existence value: Benefits people receive knowing that an environmental amenity (pristine Alaska) exists. Nonuse value: Value that people derive from economic goods, present or future, independent of any use people might make of those goods (existence and bequest are nonuse values). Net present value: A way of comparing monetary values in different periods. Name 5 major approaches to achieve environmental objectives. What determines what you may use?determines what you may use?...
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EEP101_midtermreview - Midterm Review Questions EEP...

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