APES Take Home Economics Test

You may use your book and notes for this exam. You should not put anything up on the wiki that is directly related to the test, but notes from class or outlines are fine to put up. Everything should be your own work.

It is due by 5:00 PM on Monday, except for Question 1, which is due in class. I will not be checking e-mail over the weekend until Sunday night (probably).

  1. In a far away school, certain APES students decide to go into business selling miniburgers on campus (with organic cookies on the side). They explore the market and come up with the attached supply and demand curves. (15 points)
  2. What cost will should they sell the miniburgers for?
  3. If they decide to sell them for $10, what will happen?
  4. One of their customers comes down with food poisoning (it was the homecoming queen who got violently ill during her rendition of Wordsworth’s “I wandered lonely as a cloud” in front of a school-wide assembly). Draw and label what happens to the supply and demand curves (you do not need to be exact). What happens to the price?
  5. Once that ugly incident is forgotten and the curves return to normal, the APES students find that they can substitute cheaper animal product into their burgers and no one knows the difference. Draw and label what happens to the supply and demand curves (you do not need to be exact). What happens to the price?
  6. For every 500 burgers they sell a day, they have to buy an additional stove. How does the marginal cost of the 999th burger compare to the marginal cost of the 1000th burger? How about the marginal benefits?
  7. You are a regional government and have a group of five factories that each produce Ultimate Frisbee™ Discs. The five different companies each pollute a different amount of carbon per thousand discs. (10 points)
  8. How could a pollution allowance trading system help reduce the overall carbon footprint.
  9. What recommendations do you have for its design?
  10. Will it be fair to all the companies? Why or why not?
  11. Will this system lead to less pollution in the long-run? If so, how?
  12. You have been named Regional Resource Manager for the greater Midwest. Part of your duties include running a cost-benefit analysis of coal power plants, which you know cause acid precipitation and other harmful effects. (8 points)
  13. Explain the different parts of your CBA, including examples (I do not need actual numbers)
  14. How will you consider non-market costs? What will these include? How will you figure them out? (again, I do not need the actual numbers)
  15. Give an example of a product that is more elastic and one that is more inelastic. (4 points)
  16. What is the problem with GDP? (3 points)
  17. Name and describe a type of environmental regulation that could unfairly hurt a segment of the population. (3 points)
  18. Environmental Jobs: Give an example of environmental job that is replacing a non-environmental job and explain how. Give an example of environmental job that is essentially a new job and explain how it is. How do you think additional environmental regulations will hurt or help the economy? (4 points)
  19. Explain the concept of opportunity costs using an example from your own life. (3 points)