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Assignment 2

This document provides the instructions and questions for Assignment 2 of the ECON2J03 economics course. It states that the assignment is due on March 12, 2023 by 11:59 PM. It can be completed individually or with a group, but only one submission per group is required. The assignment must be submitted in .doc, .jpeg, or .pdf format and include all group members' names if completed with a group. It should be submitted to the group drop box, whether done individually or with a group. The assignment contains 6 questions related to economics topics such as identifying optimal emission levels, computing present values with different discount rates, evaluating a travel cost approach, calculating consumer and producer surplus changes from a regulation,

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140 views2 pages

Assignment 2

This document provides the instructions and questions for Assignment 2 of the ECON2J03 economics course. It states that the assignment is due on March 12, 2023 by 11:59 PM. It can be completed individually or with a group, but only one submission per group is required. The assignment must be submitted in .doc, .jpeg, or .pdf format and include all group members' names if completed with a group. It should be submitted to the group drop box, whether done individually or with a group. The assignment contains 6 questions related to economics topics such as identifying optimal emission levels, computing present values with different discount rates, evaluating a travel cost approach, calculating consumer and producer surplus changes from a regulation,

Uploaded by

xiannvwaiwai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment 2

ECON2J03 - Winter 2023


Due: March 12, 2023, Sunday at 11:59 PM

Requirement and instruction:


A. The assignment can be written individually or in collaboration with the members of the group
that you have been assigned to. If writing the assignment with a group, each group member’s full
name and student ID number must be clearly printed on the first page of the assignment. Only
one copy of assignment per group should be submitted
B. The assignment must be submitted in .doc, .jpeg or .pdf format. No other format will be
accepted for grading
C. You may type your answers or write them using pen/pencil and submit the scanned image of
your answers.
D. You should submit your assignment in the drop box of the group you are assigned to whether you do
the assignment individually or with a group.
Questions (total: 5 marks)
1. Following are some illustrative numbers for benefits and costs arising from a program to
restrict emissions of a pollutant. Current emissions are 10 tons per month. Identify the emission
level at which net benefits would be maximized. Show that this is not the same as the emission
level that gives the highest benefit–cost ratio. Explain the discrepancy. (1 mark)

2. Using the numbers from Table below for the three different options to upgrade municipal
sewage treatment to illustrate the impact of choosing different interest rates to discount the net
benefits, compute the present value of each project if the interest rate is 2.5 percent, then 10
percent, and finally, 20 percent. (1.5 marks)

1
3. Would the travel-cost approach be a good technique to use in valuing a policy to increase
wildlife corridors in the national parks in Canada’s Rocky Mountains? Defend your answer. (0.5
mark)

4. Suppose Industry A faces an inverse demand curve given by: P=90-1.5Q. Let the supply curve
of the industry be: MC=0.5Q. The government impose a pollution-control law that causes
production costs to rise to MC=10+0.5Q. Compute the loss of producer and consumer surplus
from the regulation and illustrate the change in consumer and producer surplus on a graph. (1
mark)

5. Prove graphically that a technological change that lowers marginal abatement costs (MAC)
can lead to higher levels of environmental quality. (0.5 mark)

6. In the Figure below, the market price is initially at $3, and then it falls to $2. Compute the
change in consumer surplus if the demand curve shifts to P=10- Q. (0.5 mark)

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