Ryan's Box - www.B777.net

These are the possible 2010 Summer Economics classes at UBC.

Department is hiring professors to teach, which means they are willing to offer these courses in Summer 2010

Economics 101 - Principles of Microeconomics

Economics 102 - Principles of Macroeconomics

Economics 301 - Intermediate Microeconomic Analysis

Economics 302 - Intermediate Macroeconomic Analysis

Economics 303 - Intermediate Microeconomic Analysis I

Economics 325 - Introduction to Empirical Economics

Economics 326 - Methods of Empirical Research in Economics

Economics 345 - Money and Banking

Economics 356 - Introduction to International Finance

Economics 355 - International Trade

Economics 370 – Cost Benefit Analysis

Economics 371 - Economics of the Environment

Economics 442 – Economic Development

UBC

Department of Economics

ECON 471

Assignment #1

Due: October 16, 2008

1. You are in the market for a new refrigerator for your company’s lounge, and

you have narrowed the search down to two models. The energy efficient model

(A) sells for $500 and will save you $25 at the end of each of the next ten years in

electricity costs. The standard model (B) has features similar to the energy

efficient model but provides no future savings in electricity costs. It is priced at

only $300. Assuming your opportunity cost of funds (or discount rate) is 5%,

which refrigerator should you purchase? Show your work. (5 points)

2. A water source in B.C. can supply only 100 units of water/month (with zero

cost of production). There are two competing users of this water: urban and rural

dwellers. The monthly demands for the two groups are given by,

Urban: P = 50 − Q

Rural: P = 75 − Q.

(a) Assuming that urban users have exclusive (private) right over the

resource and that they can charge a (uniform) monopoly price, how much

water will they consume and much will they sell to rural users (draw a

diagram)? Also calculate the monopoly price and DWL caused by this

allocation . (10 points)

(b) Now assume that urban users have only usufructory right (they can

consume the resource but not sell). Does this property right regime

achieve an efficient allocation of water? Explain with the help of a

diagram (without any further numerical calculation). (8 points)

3. Suppose Kyoto protocol requires India (I) and China (C) to reduce their

combined GHGs emissions by 200 tons. The MC of GHG control functions of the

two countries are given by MCI = 10R and MCC = 5R, where R = level of GHG

control. Currently China emits 400 tons and India 500 tons of GHGs.

(a) Find the number of tradable permits (assuming each permit = 1 ton) that

needs to be distributed between India and China to achieve the goal of

reducing 200 tons. (3 points)

(b) How much GHGs should China and India reduce so that the total

reduction of 200 tons can be achieved at the minimum costs? (7 points)

(c) If each of them controls 100 tons before the trade, what is the cost savings

from trade? Also calculate who will sell how many permits to whom?

(7 points)