Exam 1: Environmental Economics and Natural Resource Management

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. _______________________________________

Suppose a small island economy uses its resources to produce mangos and national parks for tourism. What shape would you expect this economy's production possibilities curve to have? _________________ Explain why. If this economy is producing on its production possibilities frontier, but it is not producing the socially optimal combination of goods: a) What type of efficiency is this economy definitely achieving? _____________________ b) What type of efficiency is this economy definitely not achieving? ____________________

Suppose Econarctica penguins live for two periods. In the first period of their life the penguins are young and they reproduce with a total fertility rate of 1. In the second period of their life they are old and they do not reproduce. The old penguins die and the young penguins' eggs hatch in between one period and the next. Assume half of each generation is female. In Period 1 there are 4 young penguins and 8 old penguins. How many penguins will be alive two periods later, in Period 3? _____ Please show your work.

According to which model is social welfare maximized when assistance is pri?oritized for species that provide the greatest additional benefit per dollar spent on protection.

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. ________________

In the absence of externalities, which of the following will produce the efficient quantity for society?

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. ___________________

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

Suppose the LNG Inc. company wants to build three pipelines that would carry fuels under your city. The pipelines pose risks of groundwater contamination and explosion. For each pipeline the table below shows the marginal benefit to LNG Inc. and the marginal cost of expected damages to residents (in millions of dollars). Pipelines Total Profits for LNG Inc. Total Damage to Residents Marginal Benefit (added profits) Marginal Cost (added damages) 0 0 0 0 0 1 - - 120 55 2 - - 80 75 3 - - 70 125 a. Fill in the blanks in the table. b. What is the efficient number of pipelines? _____________ c. Suppose that LNG Inc. is entitled under the injunctive remedy. What is the range of offers (in millions of dollars) that the residents might make and LNG Inc. might accept to eliminate the third pipeline? Between __________ and ___________. d. If residents are entitled under the damages remedy, at the level of output selected by LNG Inc., what is the total amount of compensation LNG Inc. will provide to the residents? _____________

According to Hotelling's rule,