economics and the envirorment Flashcards
The figure shows the world oil price (in 2014 prices) and global oil consumption.You can click on the figure to enlarge it.
You are also given that the world reserve of oil more than doubled to 1.7 trillion barrels between 1981 and 2014, while more than 1 trillion barrels were extracted and consumed in the same period. Which of the following statements is correct?
discoery of technolgies to find new resources and extract them more efficeiently would outstrip the increase in demand was correct in 1981-2004
Which of the following statements concerning car usage is correct?
driving cars has negative externalities such as carbon emmsions and congestion of other drivers
he figure shows the temperature increase arising from the CO2 emitted, generated at different levels of use of fossil fuel reserves (which can be technically and economically extracted) and resources (estimated total amounts) in the Earth’s crust. For example, it states that a further 1 to 1.5 trillion tonnes of CO2 emission would be likely to lead to a 2C increase in temperature, compared to the pre-industrial average. You can click on the figure to enlarge it.
You are also given that 36 billion tonnes of CO2 are generated each year currently. Based on this information, which of the following statements is correct?
stablising the emmisions rate at the current level will not be enough to prevent possible climate induced economic catastrophe
The figure shows a global greenhouse gas abatement cost curve, defined as the abatement in 2030 compared with business as usual, produced by McKinsey in 2015. The width of each bar indicates potential abatement measured in gigatonnes of CO2 equivalant, while the height indicates its cost per tonne. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
nuclear energy has higher potential to abate then reforestation of degraded forests
The figure shows the graph of amount abated against its total cost using different abatement policies. You can click on the figure to enlarge it.
Based on this information, which of the following statements is
the fact that the slope of the curve is monotonically diminishing implies that the policies are adopted in increasing order of their cost
There are two groups in the population of an economy, the citizens and the businesses. Let both care equally about the environment so that the utility derived from the quality of the environment E is denoted by the value μ. The total income of the economy is Y, which is valued at 1 by both groups. A proportion w of this income is received by the citizens and the rest by the businesses. A proportion β of the cost of abatement A is borne by the businesses, while the rest is borne by the citizens. Then the who equation pictured represent the aggregate utility of the citizens (top) and the businesses (bottom). You can click on the equations to enlarge them.
The polluter pays principle means that β > 0.5. Based on this information, which of the following statements is correct?
the marginal disultity of abatement spending is higher for the business than the citizens
Consider a town with a single business that employs the entire labour force, whose toxic emissions are a threat to the health of the citizens. The figure shows the business’ shut-down curve (the combination of wages and environmental quality offered by the firm that would just keep the firm operating) and the citizens’ indifference curves for the quality of environment and their wage income. The citizens’ reservation indifference curve is also shown. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
all points below the citizen reservation indifference curve and above the businesses shut down curve are infeasable
The figure shows the marginal private benefit and the marginal private cost of abatement of a citizen who is considering installation of solar panels, as well as the marginal social benefit of her abatement. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
the marginal soical benefit is higher then the citizens marginal private benfit because pollution is a public bad
Which of the following statements is correct regarding valuation of the benefits of abatement?
asking citizens for their willingness to pay for a greener enviroment may result in policies that mostly affect the poor being valued less then those that raise the enviromental quality expierneced by the rich
In the figure, points A and B are the two technologies available to a firm in its production. Specifically, technology A uses 4 tonnes of coal and 2 square metres of solar panel to produce 100 metres of textiles, while technology B uses 1 tonne of coal and 6 square metres of solar panel for the same output.
Initially, the price of 1 tonne of coal is half that of the price of using 1 square metre of solar panel. In its latest budget, the government proposes a tax on the use of coal such that the price ratio increases from 0.5 to 2. Based on this information, which of the following statements is correct?
after tax is implemented the slope of the firms isocost line steeens from -0.5 to -2
The figure shows a consumer’s choice of the amount of air travel per year using indifference curves between hours of free time per year and kilometres of air travel. The consumer can afford no air travel when he chooses 6,960 hours of free time. The consumer makes $50 after taxes for an hour of work. You can click on the figure to enlarge it.
Initially, the cost of a 1km of air travel is $0.25. In its latest budget, the government proposes a fuel tax such that the cost of a 1km of air travel doubles to $0.50. Based on this information, which of the following statements is correct?
if the fuel tax reflects the social cost of the consumers air travel then the social optimal level of travelling is 15.000km p/a
The table shows the present values of a $1 payment in future discounted at different rates. For example $1 paid in 10 years’ time is worth $0.82 today when discounted at 2% annually. You can click on the table to enlarge it.
Based on this information, which of the following statements are correct?
the divergance of the discounting affect between different discount rates is larger the longer the time to payment
discount rate of 0% means that payments are worth the same in present values at all points in the future
The figure is the diagram of amount abated for the total cost of abatement using different abatement policies. You can click on the figure to enlarge it.
Based on this information, which of the following statements is correct?
the optimal policy choice will have the quality of the enviorment higher than the level at D
