EBF_200-HW_4_F10-solns

Question 2 50 points for each of the following

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Unformatted text preview: figure this out most easily by finding the component of the permit price that is effectively charged to consumers and to producers. You can get this by differencing price paid 2 from competitive price and competitive price from price received. Thus, consumers effectively pay $(41 ­40)/unit = $1/unit per permit if MED = 5, or $(45 – 40)/unit = $5/unit if MED = 25. The rest of the price of a permit is paid, effectively, by producers: $4/unit if MED = 4 or $20/unit if MED = 25. If MED = 5: permit revenue paid by consumers is $180, and $720 is paid by producers; compliance costs to consumers are $10 and to producers are $40. If MED = 25: permit revenue paid by consumers is $500, and $2000 is paid by producers; compliance costs to consumers are $250 and to producers are $1000. Question 2 (50 points): For each of the following scenarios involving non ­market goods, explain two methods you might use to determine the value of the non ­market good involved. For any methods you choose, you must explain why that method is appropriate to the valuation problem at hand. Please describe the data each method would require and list two advantages and two disadvantages for each estimation method you list. ANS: The appropriate methods with a brief rationale are given below. If you have another answer, it may receive partial credit, as indicated in...
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