EEP/IAS 118
Fall 2014
Prepared by Rebecca Taylor
Final Solutions 2014
1.
(a)
Step 1: State null and alternative hypotheses.
H0 : 1 = 1
H1 : 1 > 1
Step 2: Compute t-stat: t = 1.981
= 2.23
.44
Step 3: Get critical value: The test is one-sided at the 5% leve
Spring 2017
Environmental Economics/EEP 101/ECON 125
EEP 101/ECON 125 Environmental Economics:
Problem Set 2
This handout includes the questions for Problem Set 2. Note that the answers need to
be turned in via bCourses, where you will be prompted to ente
Lecture 8
Weitzman:
Should we regulate prices or quantities?
James Sallee
EEP 101/ECON 125
February 3, 2017
James Sallee (EEP 101/ECON 125)
P vs. Q
February 3, 2017
1 / 29
Recap of this week
Last week we learned from Pigou one solution to the problem
pos
Lecture 12
Public goods in action:
International climate negotiations
James Sallee
EEP 101/ECON 125
February 13, 2017
James Sallee (EEP 101/ECON 125)
Climate as Public Good
February 13, 2017
1 / 26
What have we done in this course?
Part 1: when are marke
Spring 2017
Environmental Economics/EEP 101/ECON 125
EEP 101/ECON 125 Environmental Economics:
Problem Set 1 Solutions
1. (Cap and Trade) Consider a market with 2 firms. The revenue function for each
firm is given by R1 = 30Q1 Q21 /2 and R2 = 20Q2 Q22 /2
Lecture 14
The Hotelling Rule:
How should we harvest a nonrenewable
resource?
James Sallee
EEP 101/ECON 125
February 17, 2017
James Sallee (EEP 101/ECON 125)
Hotelling Rule
February 17, 2017
1 / 26
Recap of last lecture
What is economic discounting?
- Ec
Lecture 13
Economic discounting:
Why do economists discount the future?
James Sallee
EEP 101/ECON 125
February 15, 2017
James Sallee (EEP 101/ECON 125)
Discounting
February 15, 2017
1 / 26
Recap
Course up until now is about markets and market failure
Ne
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 6: Net Present Value and Hotellings Rule
Discounting
What is discounting:
Scaling payoffs according to the point in time they occur.
Why do we discount:
To make quantities associated with di
Lecture 9
How much do we want of a public good?
James Sallee
EEP 101/ECON 125
February 6, 2017
James Sallee (EEP 101/ECON 125)
Public goods
February 6, 2017
1 / 21
Recap
Lectures 1 and 2: when are markets efficient or not efficient?
Lectures 3-8 all abo
Sring 2017
Environmental Economics/EEP 101/ECON 125
Section 4. P vs Q and Public Good
I. P vs Q without uncertainty
Without uncertainty, tax and tradable permit work equally well. They both are
cost effective ways to achieve social optimum.
II. P vs Q wi
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 1. Calculus and Econ Review
1
Review of Concepts
Function:
What is a function (of real numbers)?
Is a link by mathematical operator(s) between elements of a domain (inputs) and
elements of a co
Lecture 11
Sorting and exclusion:
Does voting with your feet provide efficient
levels of a public good?
James Sallee
EEP 101/ECON 125
February 10, 2017
James Sallee (EEP 101/ECON 125)
Sorting
February 10, 2017
1 / 22
Recap of public goods up until now
Th
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 5. Public Goods - Monopoly and Congestion
I. Public Good
In this class we define a public good to be anything that is non-rival. Note that
this means club goods are also defined as public goods
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 1. Calculus and Econ Review
Solutions
1
Calculus Exercise
1.What is the derivative of:
a) f (x) = 5x + 2, f (x) = 5.
b) f (x) = 3x7 + 6x3 + 5x + 2, f (x) = 21x6 + 18x2 + 5.
c) f (x) = 4lnx, f (x
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 3. Externalities (Cont.) and Property Rights
I. Externalities (Cont.)
Negative externality in monopolistic market
The monopoly already reduces the quantity produced, hence the impact of the
neg
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 1. Calculus and Econ Review
1
Review of Concepts
Function:
What is a function (of real numbers)?
Is a link by mathematical operator(s) between elements of a domain (inputs) and
elements of a co
Spring 2017
Environmental Economics/EEP 101/ECON 125
Section 2. Market efficiency and Externalities
I. Market Efficiency
Market Efficiency
Pareto efficiency: A resource allocation such that you cannot improve any individuals welfare without hurting the w
Introductory Applied Econometrics
EEP/IAS 118
Spring 2017
Villas-Boas
1
Practice Exercise 3
Assigned: 1/24/17
Question
The following table contains the quantity and the price of a barrel of oil for twelve periods. Price is in dollars
and quantity is in th
Lecture 3 Plan
3. Stat Review - Sample
4. Simple Regression without Theory
Study B1 B2
Pset 1 posted
DA#3 posted
Solution DA#1 and DA#2 already posted
3. Stat Review Sample
Draw a sample i=1,2,n
We observe 2 characteristics
( )
A sample is not the popul
Introductory Applied Econometrics
EEP/IAS 118
Spring 2017
Assigned 1/19/17 - DA 1/24
Villas-Boas
Practice Exercise#2
Suppose the following model describes the relationship between world daily demand for oil (in thousand of
barrels = K) and the price of oi
Introductory Applied Econometrics
EEP/IAS 118
Spring 2017
Assigned 1/19/17 - DA 1/24
Villas-Boas
Practice Exercise#2
Suppose the following model describes the relationship between world daily demand for oil (in thousand of
barrels = K) and the price of oi
Markets and Market Failure
A preview
A Story
Wolves
Until 1985 we paid to shoot them.
Good for naturealready more growth in Yellowstone
from suppression of herbivores.
Bad for ranchers
Worry sheep. Worry mothers.
How to increase wolf numbers?
Creat
Consumer Surplus
1999, 2006,2010, 2011 by Peter
Berck
Money Measures
How much would you be willing to pay
(WTP) for a new ski area?
How much does it cost?
Shouldnt build unless total WTP is greater
than total cost.
Need WTP in $. Need a money measure.
Costs-Where S(P) comes from
1998,2007, 2010 by Peter Berck
The Cost Function C(q)
Output. Product firm sells
Input. Goods and services bought by firm
and used to make output.
includes: capital, labor, materials, energy
C(q) is the least amount of mon
Techniques, Isoquants, and Cost
Curves
2010 Peter Berck
Definitions
Output Q; specific amount Q*
Inputs x= (x1xn)
If using inputs x results in output Q*, then x is
a technique to make Q*.
1 brisket, 1 pan, 3 hours of oven services at 375, 1
large she
The Welfare Theorem & The
Environment
1998, 2011 by Peter Berck
Outline
Surplus as measure of consumer satisfaction
VC as area under MC
Competition maximizes Surplus plus Profit
Not true with externality: Pollution
Use of Tax to reach optimality
Use of R
Demand and Supply
Peter Berck 2012
Lecture Outline
Goods
People Demand Goods;
Shift in demand
Firms Supply Goods;
Keep Supply and Demand Separate
Demand and Supply intersect at the equilibrium price and
quantity
Shift and movement
Horizontal Addi
Stated Preference
2015
Stated
Means you ask somebody about
something rather than watch them do
something.
You can lie.
Passive use
I love wolves existence but I dont do
anything at all with them
I dont contribute to wolf organizations
I dont go to Ye
Trading and Efficiency
1998, 2006 Peter Berck
Topics
Marginal Cost of abatement and Bid for
Permits
Efficient Allocation of Emissions among firms
Cap and Trade Program
Coase Theorem
Reminder
A Pareto improving exchange is one that
makes at least one
Problem set #1, EEP/Econ 102, Fall 2015
Due no later than September 15 at the end of lecture (as a hard copy).
Consult the syllabus for information on problem sets.
Questions based on the Math Review
1. For the function () = 2 + 04 , graph (), 0 (), and 0