Reference no: EM131093262
Environmental Economics Homework 7
Q1. The diagram below is from lecture, pertaining to the quantity extracted of a nonrenewable resource. Suppose the resource is copper. Suppose a substitute for copper is brought to market this year. Show on the diagram the effect of this substitute on this year's price of copper and the quantity of copper extracted (hint: the effect on price is clear. The effect on quantity is ambiguous).
2. Answer the following true/false/uncertain questions (T/F/U). If you state "uncertain" provide an explanation.
a. Hotelling's rule indicates that the price of nonrenewable resources rises over time.
b. Historically real world prices of nonrenewable resources have generally followed Hotelling's Rule.
c. The marginal user cost of nonrenewable resource extraction is equal to the discounted future net benefit of the last unit extracted today.
d. For nonrenewable resources, the efficient current extraction of the resource is defined by MNB0=MEC+MUC0.
e. When the expected future demand for a good increases, the current MUC increases.
Q3. With a discount rate of zero, does the standard model of a renewable resource like a fishery predict that the efficient sustained yield (ESY) stock level is at least as great as the maximum sustained yield (MSY) stock level?
Q4. Is it possible in some circumstances for the open access sustainable stock level (SOA) to be higher than the maximum sustained yield stock level, SMSY?
Q5. This question pertains to a graph that you have never seen before. It's a good question to test your conceptual understanding of the basic fisheries model.
Below are two "stock paths" showing fish stock over time, where initial stock at time 0 is the same in both cases. One path is the one that would be observed in an open access regime, the other one is the efficient path, i.e., the path that would be followed by a management regime that maximizes the present value of profits from the fishery.
(a) Label the two paths, "open access path" and "efficient path".
(b) How did you know which path was which?
(c) Show on the diagram SESY and SOA.
(d) Starting from the same initial stock level, is it possible for the efficient path to initially rise over time while the open access path falls over time? Explain in one sentence.
|
Research a case where a taxpayer
: Research a case where a taxpayer was subject to a tax penalty. Give a brief description of the facts and discuss whether or not you agree with the decision. Be sure to note your sources and in-text citations in APA format. minimum of 250 words
|
|
Problem regarding the choice of a lump-sum
: Mr. Jackson has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of $5,000 today, or an ordinary annuity of $1,000 a year for the next five years followed by an annuity of $500 a year for years 6-10.
|
|
Present value of the expected tax-shield benefit
: If this amount can be used to offset income by $1 million each year for the next four years, what is the present value of the expected tax-shield benefit? The cost of capital is 14%.
|
|
What is the current price of bond
: Grand Adventure Properties offers a $1,000, 9.5 percent coupon bond with semiannual payments. The yield to maturity is 11.2 percent and the maturity date is 11 years from today. What is the current price of this bond?
|
|
Standard model of a renewable resource
: With a discount rate of zero, does the standard model of a renewable resource like a fishery predict that the efficient sustained yield (ESY) stock level is at least as great as the maximum sustained yield (MSY) stock level
|
|
Analyze the role of community-public health
: Analyze the role of community/public health nursing and community partnerships as they apply to the participating family's community.
|
|
Compute the annual payments
: Knopfler Ltd. sells an asset with a $1 million fair value to Dire Inc. Dire agrees to make six equal payments (payments include interest and principal), one year apart, starting one year from the date of sale. The appropriate interest rate is 6%. ..
|
|
Amount of the first payment represents interest
: The note calls for five years of monthly payments starting on February 1, 2016 at a rate of 8 percent. Calculate the required monthly payment. What amount of the first payment represents interest.
|
|
Stated rate of interest on the bonds
: The semiannual, 8-year bonds of Alto Music are selling at a price of $1,010. The bonds have a maturity value of $1,000 and have an effective annual yield of 8.6 percent. What is the stated rate of interest on the bonds?
|