Posted: September 22nd, 2022

ECON3128/ECON6040 Practice Midterm Exam

ECON3128/ECON6040 Practice Midterm Exam
Notice:
1. Your mid-term will comprise two components. Within the first half, you’ll have 35 minutes to finish
some MCQs and quick reply questions. You will want to finish the primary half answering all
questions on the wattle quiz. Within the second a part of the examination, you’ll have 55 minutes to
full some drawback fixing questions handwritten on paper and add the scanned
pages. Notice that there will likely be a brief break between the 2 components of the examination. (for extra
detailed info see the “Pre Midterm Festivities” Handout within the Midterm Preparation
part)
2. Solutions to the observe examination will likely be launched within the 2nd week of the educating break. To make
probably the most out of the observe examination, we strongly encourage you to try the questions earlier than
you see the solutions.
Half One
MCQs
The MCQs in your mid-term will likely be much like what you’ve seen in your quiz (protecting all
content material from the primary 6 weeks of the semester).
Brief Reply Questions
Q1: Contemplate a fishery
(a). Clarify why income of particular person fishers differ in open-access equilibrium and
social optimum equilibrium?
(b). Clarify why open-access equilibrium isinefficient utilizing the idea of externality.
Q2: How is wage-risk Assessment used to estimate the worth of a statistical life? What are potential
issues with wage-risk Assessment?
Half Two
Downside Fixing
This fall. Suppose wooden pulp mill is located on a financial institution of the Murrumbidgee River. The personal
marginal value and marginal advantages of manufacturing wooden pulp is given by the perform
The manufacturing Y is measured in tons. For each ton of wooden pulp manufacturing, the downstream
Wagga Wagga group endure $10 loss from the polluted water (all costs may very well be regarded as
hundreds of thousands of dollars to be extra real looking however for simplicity we simply name it dollars)
(a) What’s the profit-maximising output of wooden pulp with none regulation? What’s the
social profit maximising output of wooden pulp?
(b) Draw a diagram illustrating the market. Keep in mind to label every little thing: marginal value
(MC), marginal profit (MB), social marginal value (SMC) features, identify the axes
and mark your solutions to half (a).
(c) Calculate the online social profit at profit-maximising output degree with out regulation and
social profit maximsing output degree
(d) Identify and focus on two options that may obtain social profit maximising output degree.
Q5 We’re involved with solely two generations. The demand and provide features for oil
within the current technology are given by:
the place Q is expressed in hundreds of thousands of barrels and P is the worth per barrel. There’s a whole of 100
million barrels of the useful resource accessible.
(a) Draw a supply-and-demand graph exhibiting the equilibrium value and amount
consumed within the present technology within the absence of any consideration of the longer term.
Keep in mind to label all axis, traces, and vital intersections (equilibrium) in your
graphs. Clear up for the equilibrium value and amount algebraically.
(b) Draw a graph exhibiting the marginal web advantages from consumption on this interval in any respect
ranges of consumption as much as the equilibrium degree. Categorical the marginal web profit
perform algebraically.
(c) Suppose that the marginal web profit perform is predicted to be the identical for the following
technology. The low cost issue is 1/four. Calculate the environment friendly allocation of sources
between the 2 generations and present this graphically. (You possibly can lengthen your graph
from half b. Once more identify axis and features and mark the equilibrium.)
(d) What’s the applicable useful resource depletion tax within the first interval?

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