ECN510 Environmental Economics Midterm ExamR

Java Python ECN510 Environmental Economics

Midterm Exam

Topics and concepts

Chapter 1

1. Efficiency and equity concepts and why they are central to environmental economics?

2. The incentives that contribute to pollution arising from people and firms.

3. Open access, private, and common property rights and explain why the assignment of property rights can help reduce pollution.

4. Externality (positive and negative)

5. The anthropogenic sources of greenhouse gas emissions and costs of mitigation of GHG

6. The tradeoffs between economic growth and the environment.

Chapter 2

1. The three components of natural capital

2. Why it is called as ‘capital’?

3. Impacts of use of natural capital

4. Ways to reduce residuals in the economy

5. The categories of pollution

Chapter 3

1. Demand, Value and Willingness to Pay (WTP)

2. Demand curve (relationship between price and quantity demanded)

3. How diminishing WTP (downward sloping demand curve) is explained by the Law of Diminishing Marginal Utility

4. Marginal WTP and Total WTP

5. Supply and Marginal Cost

6. Opportun ECN510 Environmental Economics Midterm ExamR ity cost

Chapter 4

1. Economic efficiency and how it can be achieved

2. Efficiency and equity

3. The causes of market failure (negative, positive externalities and open access resources)

4. Characteristics of public goods and why they give rise to free riding.

Chapter 5

1. Positive and normative economics.

2. Marginal damage function

3. Total damages (TD) and how to find TD using MD

4. 4 factors that matter for damages

5. Marginal abatement cost (MAC)

6. Total abatement costs (TAC) and how to find TAC using MAC

7. Determination of a socially efficient level of pollution and how this equilibrium minimizes net social costs compared to no emission control.

Chapter 6

1. The basic framework for the benefit-cost analysis  

2. Maximum net social benefits and the socially efficient level of output (emission).

3. The role of discounting in benefit-cost analysis

4. The relationships among Present Value, Future Value and Discount Factor

5. The relationships among Nominal, Real Interest Rates, and Rate of Inflation

6. Why the social and private discount rates will typically differ

7. Why the equity and the distribution of income enter into benefit-cost analysis