1.Suppose gas costs 1 a gallon and the average car gets 20 miles per gallon. If Parliament mandates that car have to get 24 miles per gallon, by what percentage will this lower the cost of driving? If the elasticity of total miles driven (per year) with respect to the cost of driving is 1, by how much will total miles driven per year increase, assuming it is 10,000 miles at the beginning? How much will total annual gas consumption of average car change as a result of the mandated program?2. If electric power companies make their profits by selling electricity, why do these companies actively promote electricity conservation by consumers, which would tend to reduce the amount of electricity they sell?3, What would the biological growth curve look like if critical stock size exists below which growth rate become negative and the stock evolves to zero?4.By decreasing effort, fishers can often catch more fish. Explain this.
Trang 1Student: Nguyễn Hữu Dũng
Student ID: 1353091031
Vietnam Forestry University ECON 340 – Introduction to Natural Resource Economics
Problem set 4 - Assignment 4
Question 1: Suppose gas costs $1 a gallon and the average car gets 20 miles per
gallon If Parliament mandates that car have to get 24 miles per gallon, by what percentage will this lower the cost of driving? If the elasticity of total miles driven (per year) with respect to the cost of driving is -1, by how much will total miles driven per year increase, assuming it is 10,000 miles at the beginning? How much will total annual gas consumption of average car change as a result of the mandated program?
Answer:
Percentage will lower the cost of driving:
∆P = * 100% = 16,67 %
We have: Price elasticity =
Because elasticity of total miles driven (per year) with respect to the cost of driving
is -1, so: E = ∆Q/∆P = -1 where ∆P = 16.67%
Q1 = 10000
Q2 is total miles driven per year
Trang 2 E = -1 =
Q2 = 100 * = 12 048
The total miles driven per year increase is:
Q2 – Q1 = 12 048 – 10 000 = 2048 (miles)
The total annual gas consumption of average car change as a result of the
mandated program is : = 502 (gallons)
Question 2: If electric power companies make their profits by selling electricity, why do these companies actively promote electricity conservation by
consumers, which would tend to reduce the amount of electricity they sell? Answer:
If you are a homeowner who has been repeatedly beseeched by your utility company to sign up for a particular program that promises to save energy, you may wonder what is going on After all, if you cut your electric bill, you're paying the electric company less money Your electric company wants you to use less electricity As you may have noticed, many utilities are offering smart meters to homeowners, designed to help them monitor their energy usage and hopefully use it more efficiently May you think that it opposite with themselves when seller tell you buy less?
So why? To answer this question, we have to see on other side means that seller can get another profits from energy conservation More specific that provider tell you save more energy, first for save consumers money for using energy It is truth because if you use less you pay less, nothing to say, and you use more, you have to pay more, so the both get benefits from energy conservation With provider, you know about taxes, when people use less of energy, provider pay less of taxes same with consumers, Somewhere at the top of the electricity supply chain, there is often a mandate that requires a utility to take a tiny
Trang 3percentage of each consumer's bill, usually around 1 percent, and feed it back into an energy-efficiency program This is typically part of a state programs If they do hit their goals and targets and do well, the public utility commission will allow them a rate hike Means that if provider can organized this programs successfully, they can get more utility from government
Other side, with related firms such as: an electric company will give a home fluorescent and LED lighting or some electronic groups, and green energy companies…etc may provider can get profits from these companies and
groups By the sustainable use saving energy
Question 3: Derive the condition for the optimal rotation when a forest also provides species habitat services
Adding H (annual value of forest as species habitat) to the model
increases the optimal rotation Several new marginal benefit functions
are shown (the dotted lines), corresponding to the higher the value, the
more the optimal rotation is lengthened The first dotted curve has an
Trang 4optimal rotation of t2 years; if H is somewhat higher the rotation
increases to t3, and so on In fact, if H becomes large enough, there will
be no intersection with the marginal cost curve, indicating that the
optimal rotation is essentially infinite, that is, social efficiency implies that the trees are never to be harvested
Question4 : How would decision about managing forest for carbon
sequestration be affected by the speed at week wood building materials decay? The rate at which the housing stock decays determines the rate at which
the carbon in the building materials is released into the environment The critical factor is whether this rate is faster or lower than the growth
rate of trees If it is slower, then harvesting trees for building materials
will increase amount of carbon sequestrated relative to the quantity sequested by leaving forests un-harvested If the decay rate is higher than the tree growth rate, the opposite conclusion holds
This higher timber price will increase ΔV, V0, and S and shift the ΔV
Trang 5function and the (V0 – C + S)r function outward The optimal rotation interval could increase, decrease, or remain unchanged
Trang 6Question 5: What would the biological growth curve look like if a critical stock size exists below which growth rate become negative and the stock evolves to zero?
Trang 7Answer:
The inverted U- shaped function starts at the origin- no fish, no increment At higher stocks the increment is larger, reaching a maximum at a stock size of S1 At the stock size of S0, the different factors affecting stock size are all in balance, so
no increment Stock sixe S0 is a natural equilibrium if the population was left to itself and ecological factors was constant Thus, the biological growth curve at stock size S0 exists below which growth rate become negative
In case, at a zero level of effort, the fishery result in the maintenance of small stock sizes At still higher effort levels, tock levels become reduced At a very high effort level, the stock would be driven to zero
Question 6: By decreasing effort, fishers can often catch more fish Explain this Answer:
As we known, population growth 60-70 million each year over the world lead to demand of food increasing on time, more specific that sea food increased So one question that decreasing effort, can fishers catch more fish? To answer the question, we analyze in long and short-run, negative and positive impacts of these
Trang 8Firstly, in short-run means that negative impacts on fishers life, by decreasing effort means that decreased yields lead to be demand also decreased and respectively with economic efficient But it is just a little bit cause by increasing price when quantity (yields) decline
Secondly, in long-run means that positive impacts, decreasing effort lead to many consequences about environment matters and for sustainable development and some benefits from improving technology means that changing in tools (instruments) for fishers can catch more far from coastal In this way, fishers can
be improved environmental matters cause by prevent catch more baby fishes lead
to be extinction and may be loss balance of biodiversity
Let's now turn to basic fisheries science: fish biology and ecology, what methods people use to fish, and why they choose those methods First, let’s review how fish stocks respond to being fished The basics are simple: mortality (death) from fishing, or from other causes, reduces the size of a fish stock, but this can
be balanced by reproduction and recruitment (settlement of young fish in a certain area; or, growth of young fish to a catchable size) A fish stock can tolerate a certain level of mortality, if the mortality is balanced by
reproduction and recruitment At high levels of mortality, however, the stock cannot reproduce fast enough to replace the fish being killed, and the stock size will decline The amount of fish caught (fishery production or catch) changes with fishing effort like this:
Trang 9In conclusion, In my opinion I think that by decreasing effort, fishers can catch more fish to develop economical effectiveness for sustainable way with species conservation and biodiversity
REFERENCES
1 Willard, B (2011) "3 Sustainability Models" citing The Power of
Sustainable Thinking by Bob Doppelt, and The Necessary Revolution by
Peter Senge et al Retrieved on: 2011-05-03
2 http://www.uri.edu/cels/enre/ University of Rhode Island Department of Environmental and Natural Resource Economics Retrieved October-22-09
3 Encyclopedia of Earth Article Topic: ecological economics
4 Wordnet Search: Earth science
5 Geoffrey Heal (2008) "exhaustible resources," The New Palgrave
Dictionary of Economics, 2nd Edition Abstract
6 Vogely, William A "Nonfuel Minerals and the World Economy", Chapter
15 in "The Global Possible" by Repetto, Robert, World Resources Institute Book Yale University Press
7 Simon, Julian "Can the Supply of Natural Resources Really be Infinite? Yes!", "The Ultimate Resource" 1981, Chapter 3
8 "Domestic Reserves vis-a-vis Resources","Congressional Handbook on U.S Materials Import Dependency" House Committee on Banking, Finance
& Urban Affairs, September 1981, pp 19-21
9 U.S Bureau of Mines, 1978-79 Minerals Yearbook, "Cobalt" and "The Mineral Industry of Zaire" chapters, Vol I pp 249-258, Vol III pp 1061-1066
10 "THE RESOURCES WAR", "Congressional Handbook on U.S Materials Import Dependency" House Committee on Banking, Finance, and Urban Affairs, September 1981, pp 160-174
WEBSITE:
https://en.wikipedia.org
Trang 10http://www.economics-ejournal.org/economics