This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Review: First Challenge Environmental Economics: ECO 345 The following questions review only the class notes since the last homework. The format is 4-5 short answer and 2-3 longer questions. The formulas provided below will also be provided on the challenge. All questions come from the notes. Also review the first homework, chapters 1-2, 3.3, 4, 5.2-5.5, 13.1, and 12.1A. The following formulas may be useful: Efficient Allocations MRS 1 xy = MRS 2 xy , MRTS 1 LK = MRTS 2 LK . (1) Market Allocations MRS 1 xy = MRS 2 xy =- P x P y = MRT xy , MRTS 1 LK = MRTS 2 LK =- w r . (2) Efficient Allocations of goods with and without externalities P S = MC S ( S ) = dC s ( S ) ds . (3) P S = MC S ( S ) + MD ( S ) = dC s ( S ) ds + dC T ( T,S ) ds . (4) Selling the Right to Pollute P ′ = MD ( S ) = P s- MC ( S ) . (5) Pigouvian Tax t = MD ( S ) = MD 1 ( S ) + MD 2 ( S ) + MD 3 ( S ) = MC ( S ) . (6) 1 Question 1 Define each term in bold as a good or a bad, rival or non-rival, and excludable or non- excludable. Qualify your answer if necessary. Finally, for each does the market economy provide too much, too little, or the efficient amount of the good/bad? a. Smog. Smog from cars obscures the view of the ocean from a condo building. b. Mercury. Mercury in the Everglades seeps into water supplies, causing health prob- lems....
View Full Document
This note was uploaded on 01/08/2012 for the course ECO 345 taught by Professor Kelly during the Fall '11 term at University of Miami.
- Fall '11
- Environmental Economics