Question 1

Suppose tourists spend $8 billion annually to visit wilderness areas in Utah. This information alone could be used to estimate the value of Utah's wilderness areas using what method?
Identify two types of value that this method fails to capture.

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Question 2

Suppose each year of education a student receives provides $1000 worth of external benefits to society because students share their wisdom, support better policies, and serve as more productive workers. On the graph to the right, draw typical-looking curves for the private marginal benefit and the private marginal cost (just like the ones for beehives and airline flights among other goods in the textbook). Add the social marginal benefit curve as appropriate for this particular situation. Label the socially optimal quantity of years of education "Qs" and label the quantity that will actually be purchased (in the absence of government intervention) "Qp".
Using a specific number in your response, indicate one approach the government could take to achieve the socially optimal quantity of education.

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Question 3

Suppose Appalachia has 200 tons of coal to allocate between this period and next period. The net marginal benefit curve for coal this period is a straight line with a vertical intercept of 200 and a horizontal intercept of 200. The net marginal benefit curve for coal next period is a straight line with a vertical intercept of 200 and a horizontal intercept of 100. a) Draw the net MB curves for each period on the graph. b) If the discount rate for benefits next period is infinity, what is the dynamically efficient quantity of coal to use in the present period? ______ c) Use a dotted line to draw the discounted net marginal benefit curve if the discount rate for benefits next period is 300%. d) Assuming the discount rate for future benefits is 300%, label the dynamically efficient quantity of coal to use this period as Q₁.

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Question 4

Suppose Kevin and Sara are the only inhabitants of an island with no butterfly species. Butterfly species are a public good that can be purchased for the island. Kevin would pay up to $90 for the first butterfly species, $40 for the second butterfly species, and nothing for any additional butterfly species. Sara would pay up to $60 for each butterfly species up to a quantity of five.
On the graphs below, draw the demand curves for butterfly species for Kevin, Sara, and the market. Label each axis and the (specific numerical) height of each demand curve for each quantity up to 5 butterfly species.
If butterfly species cost $95 each, what is the socially optimal quantity of butterfly species? __________

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Question 5

Identify the fuel that matches the description.
-It can power combustion engines and fuel-cell electric vehicles. Electricity generated from the reaction of it and oxygen from the air provides fuel cells with clean, quiet power. The only emis?sions are pure water and heat. ________________

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-It...

Question 6

Identify the fuel that matches the description.
-It is made from renewable plant oils or animal fats and can run in current diesel engines. ____________________

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-It...

Question 7

Identify the fuel that matches the description.
-Like coal and oil, it has its origins in the swamps of past geologic periods, but it is relatively clean burning and abundant. ___________________

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-Like...

Question 8

The following table shows the net annual profits (in millions of dollars) for two clothing companies, Street 21 and American Beagle, depending on whether they choose to make their jeans with organic cotton or cotton grown using pesticides. Within each square, the number on the left indicates Street 21's profit and the number on the right represents American Beagle's profit.
 
-the firms could cooperate on their strategy selection, trust each other, and divide their combined profits equally, what set of strategies would they choose?
American Beagle:
Street 21:

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The answer of The following table shows the net annual...

Question 9

The following table shows the net annual profits (in millions of dollars) for two clothing companies, Street 21 and American Beagle, depending on whether they choose to make their jeans with organic cotton or cotton grown using pesticides. Within each square, the number on the left indicates Street 21's profit and the number on the right represents American Beagle's profit.
 
-the firms could not trust each other enough to collude, is there a dominant strategy for either or both firms? If so, what it is?
American Beagle:
Street 21:

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Question 10

Briefly define each of the following terms:
-Flow pollutant

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-Flow...

Question 11

Briefly define each of the following terms:
-Risk burden

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-Risk...

Question 12

Briefly define each of the following terms:
-Front Page of the Newspaper Test

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-Front...

Question 13

Identify a specific method described in the textbook other than the CVM for placing a value on each of the following assets and briefly describe how exactly the value would be obtained using that method. Do not apply the same method more than once.
a) A national park Method: __________________
b) Safe tap water Method: __________________
c) Human life Method: __________________

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Question 14

Suppose expanded use of nuclear power would involve a 5% chance of problems causing the release of enough radiation to kill 10 people and an additional 1% chance of the release of enough radiation to kill 500 people. Assume unidentified humans such as those who might die as the result of nuclear disasters are found to be worth $9 million each. If the discount rate is zero, what is the expected value of the human loss from nuclear expansion?
Suppose instead that the discount rate is 10% and the expanded use of nuclear power would certainly kill 100 people in 20 years. What is the present value of the human loss due to nuclear expansion?

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Question 15

Command-and-control environmental policies differ from market-based environmental policies.
a. What is one distinguishing characteristic of command-and-control environmental policies?
b. Provide one example of a command-and-control policy.
c. What is one distinguishing characteristic of market-based environmental policies.
d. Provide one example of a market-based policy.

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Question 16

The textbook explains several indexes that improve on GDP as measures of welfare and progress.
a. Identify one category of goods that is included in GDP but not in these indexes? ___________________
b. Provide an example of a good in the category identified in part (a). ______________________________
c. What type of production do the alternative indexes include that is not part of GDP? _________________
d. Provide an example of that type of production. ______________________________________________
e. Identify an example of one of these alternative indexes. _______________________________________

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Question 17

Your roommate wants you to be happy, but not too happy, which would make your roommate jealous. If you have 0 utils, your roommate feels bad for you and has 0 utils. For the 1^st 6 utils you gain, your roommate gains 1 util for every 2 that you gain. After that, more utils for you make your roommate resentful and less happy. Your roommate losses 1 util for every 2 utils you gain beyond 6. Draw a utility distribution curve by plotting the relationships described above. Label the points representing the Rawlsian, utilitarian, and egalitarian solutions "R," "U," and "E," respectively. The dotted 45-degree line and numbers are provided as guides that you might find useful.

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Question 18

Suppose there are 1 billion tons of titanium dioxide in the world and two periods: sooner and later. What we use sooner, we can't use later. Titanium is sometimes used to build rocket ships and road bikes among other light and durable products. With Q representing the quantity of titanium used sooner, the marginal benefit (net of any costs) from titanium used sooner is MB_sooner = .6 billion - Q. The (net) marginal benefit from titanium used later, MB_later, is constant at .6 billion. That is, every unit of titanium used later has a marginal benefit of .6 billion. a) Illustrate this situation with a two-period model (as shown in the textbook) that includes both marginal benefit curves, labeled MB_sooner and MB_later. b) If we don't discount benefits received later, what is the dynamically efficient quantity to use sooner? _______. c) If the present value of benefits received later is one-half of their value later, what is the dynamically efficient quantity to use in each period? Sooner ________ Later ________ d) If we have an infinite discount rate for benefits received later, what is the dynamically efficient quantity to use in each period? Sooner ________ Later ________

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Question 19

Draw the environmental Kuznets curve. Be sure to label everything. Explain how the Kuznets relationship helps to justify an agenda of economic growth.

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Question 20

What is the optimal harvest condition for a tree? (Either version is fine.)
Explain why this equation makes sense in common sense terms

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Quiz 1: Environmental Economics and Natural Resource Management

Suppose tourists spend $8 billion annually to visit wilderness areas in Utah. This information alone could be used to estimate the value of Utah's wilderness areas using what method? Identify two types of value that this method fails to capture.

Identify the fuel that matches the description. -It can power combustion engines and fuel-cell electric vehicles. Electricity generated from the reaction of it and oxygen from the air provides fuel cells with clean, quiet power. The only emis?sions are pure water and heat. ________________

Identify the fuel that matches the description. -It is made from renewable plant oils or animal fats and can run in current diesel engines. ____________________

Identify the fuel that matches the description. -Like coal and oil, it has its origins in the swamps of past geologic periods, but it is relatively clean burning and abundant. ___________________

Briefly define each of the following terms: -Flow pollutant

Briefly define each of the following terms: -Risk burden

Briefly define each of the following terms: -Front Page of the Newspaper Test

Draw the environmental Kuznets curve. Be sure to label everything. Explain how the Kuznets relationship helps to justify an agenda of economic growth.

What is the optimal harvest condition for a tree? (Either version is fine.) Explain why this equation makes sense in common sense terms