2)The Future and Climate

Question 1

Problem with climate change?

Answer 1

-externalities -> missing markets

-we create a market, it cannot exist as they are not even alive

Question 1

Way to fix climate change?

Answer 1

-working out β

-Work out how much should we care and how much do we, and fix the difference

Question 2

How to interpret utility function using q instead of FOC?

Answer 2

-using q (the price gen 1 sells K2 to gen 2)

Question 3

What is Nordhaus beta?

Answer 3

-0.97-0.99
-he used revealed preference observing interest rates

Question 4

what is Stern Beta?

Answer 4

-socially correct , high beta

-0.999

Question 5

Different social welfare functions?

Answer 5

-Utilitatrian approach

-Max-Min approach (Rawls)

-Sen

Question 6

What is the utilitarian approach for social welfare function?

Answer 6

-Utilitarian approach- maximize expected utility, maximize sum of all utilities

^(no consideration for inequality)

^Diminishing marginal utility (might want to redistribute)

Question 7

What is the Max-Min approach for social welfare function?

Answer 7

-maximizing the utility of the worst person in society

Question 8

What is Sen approach for social welfare function?

Answer 8

-measure capabilities of each person, health education etc increase these

Question 9

When a tax is place on gen 1, what does not change?

Answer 9

-relative prices unchanged