ECON3803 PS3- Running Out Of Resources Vs Running
ESSAY ON RUNNING OUT OF RESOURCES VS RUNNING OUT OF ENVIRONMENT
(20 points) Write a short essay on the following topic: how important are concerns about running out of resources versus concerns about negative externalities from non-renewable resource extraction? Use either the Mount Polly spill or coal and climate change as a working example to make your argument. You may refer to sources mentioned in the Mount Polly or China, climate change and cancer slides I covered in class, and from your own research. Government reports, academic papers, and news articles are satisfactory sources, but make sure to cite your work with references at the end of your document. If you are uncertain about how to create a list of references, please refer to the citation style guide at (1) http://www.chicagomanualofstyle.org/tools_citationguide.html and/or (2) http://library.concordia.ca/help/howto/mla.php.
Recall the definition of a negative externality: a cost incurred by people who are not party to the decisions that create it.
Please write no more than 2-3 single-spaced pages (standard font size, single-spaced). There is no minimum page length but you must make sure to thoughtfully and cogently address the question.
ECON 3803 PS3 PAPINEAU
(2 points) (3 points)
a) Plot fish growth as a function of fish stocks (starting at a stock of 0 and then increasing in increments of 10). What is the stock associated with the Maximum Sustainable Yield?
b) Find the steady state fish stocks as a function of effort.
- That is, for each level of effort (e) find the value of S where the harvest is equal to the growth in stocks. Show how you get this.
- Show that fish stocks decline as the level of effort rises and are zero if effort rises above a critical level.
2 ECONOMICS OF FISHING FISH GROWTH FUNCTION:
HARVEST FUNCTION: COST FUNCTION:
S = gS[1-S/K] H = q S e
C(e) = ce
where g = 0.5 and K = 100 and S is the stock of fish.
where q = 0.025 and e is effort. where c = 2$ per unit
(5 points)
(10 points)
(10 points)
c) Let the price of fish equal 10$.
• Plot revenues as a function of effort. To do this you will need to show the
ECON 3803 PS3 PAPINEAU
d)
e)
revenue equation.
• The revenue function you have just found implies a marginal revenue of
MR= 25 – 2.5e. Superimpose this equation on the revenue plot.
Given costs, find the level of effort that would yield zero profits.
- That is, find the level of effort where Revenues – Costs = 0 . Call this eFE (the free entry effort level).
- Given eFE , find the associated steady state stock (by substituting into part (b)). Is this an efficient level of effort? Explain. Find the level of output that would yield maximum profits.
• That is, find the level of effort where Marginal Revenues = Marginal Costs. Call this eMO the monopoly effort level. Given eMO , find the associated steady state stock (by substituting into part (b)). Is this an efficient level of effort? Explain.
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Rating:
5/
Solution: ECON3803 PS3- Running Out Of Resources Vs Running