How an incentive change could contribute

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Reference no: EM133710431

Environmental economics

Q. 1 Explain how an incentive can change human behavior (both consumption and production) toward the natural environment. Write one example of how an incentive change could contribute to solving an environmental problem (one example each for consumption and production).

Q.2 Suppose the marginal damage cost is estimated to be MD = 1.2E and the marginal abatement cost is estimated to be MAC = 220 - E. Find the socially efficient level of emission and the Total Social Costs. Draw the graphs and show your calculations.

Q.3 The following equations represent the demand and supply functions in the market for some good where an external cost (negative externality) like pollution results in damages of $4 per unit of the good produced (which means MEC is constant): P = 50 - QD MPC = 2 + QS Solve for (a) the competitive market equilibrium output and (b) the socially efficient level of output for this market.

Q.4 Make up a demand function (here, remember the law of demand). Draw the demand curve based on your function, and pick a quantity demanded and find the total benefits for the chosen quantity

Q.5 Explain briefly why a total elimination of environmental pollution (say air pollution or water pollution) would be ideal, but economically not optimal. Use a MD and MAC graphs and hypothetical numbers.

Q.6 Suppose you have an estimated functions for the demand and supply of an environmentally friendly product as follows: MWTP = 100 - 0.5Q and MC = 1.5Q

What would be the socially efficient equilibrium output (Q) and the net social value? Show your calculations.

Q.7 Suppose a society's damage from a pollution is estimated to be the following function: MD = 1.4E.

What would be the maximum level of damage (TDmax) in a monetary term if the uncontrolled level of emission is estimated to be 100 units? Draw the graph and show your calculations

Q.8 Explain why publicly funded multiple-year environmental projects or programs should use a lower discount rate than that for private sector projects

Reference no: EM133710431

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