Economics/Policy And Planning Analysis
Questions Begin on the next page
Instructions:
To answer question #1: Refer to the “Tol 2008” and “Tol notes” PDF to answer question 1.
Use public policy + economics knowledge + research to answer questions 2, 3, 4 & 5.
Questions 4 & 5 are longer answer questions (approx 300 words each)
Note: I partially answered question 4 and 5 (green color text), please elaborate further on the information provided and answer the questions fully.
***Answers due by Wednesday November 17th, 10pm Pacific Time.**
Part I: Short Answers
1. (6 points) Tol (2018) describes two important conclusions from his review of climate change impacts estimates. Briefly describe them, distinguishing between short- and long-term where necessary. 1. ______________________________________________________________________ ______________________________________________________________________ 2. ______________________________________________________________________ ______________________________________________________________________
2. (6 points) There are three main types of government action: 1) Influence private production; 2) Provide social insurance and safety nets; 3) Produce public goods and services. Provide an example that illustrates each type of potential government action a. ______________________________________________________________________ ______________________________________________________________________ b. ______________________________________________________________________ ______________________________________________________________________ c. ______________________________________________________________________ ______________________________________________________________________
3. (6 points) Give the name and a short description of two major pieces of environmental legislation passed in the U.S. between 1960 and 1990. a. ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ b. ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________
Part II: Longer Answers
4. (12 points) Policy Scenario I (300 words approx)
In the following short-run policy scenarios, explain how the policy described might cause a shift of the supply and/or the demand curve in the market specified, using terms like “outward/inward” or “up/down.”
Background: Currently, the safety, purity and efficacy of products known as ‘nutritional supplements’ (e.g. vitamins, minerals, proteins etc.) are only loosely regulated in the U.S.
Scenario 1: In response to concerns for public safety, Congress passes strict new legislation and provides funding for enforcement, including a ban on the import of any such products from outside the country (including those sold online or in person).
Scenario 2: Strict new efficacy, safety and labelling standards for products manufactured in the U.S. (similar to those applied to prescription only or over-the-counter medicines).
To include in answer:
Scenario 1: Due to the banning of importing nutritional supplement goods into the US it will cause a rise in upward shift in demand for locally produced nutritional supplements.
Scenario 2: The new safety and labeling standards slow the rate of production causing a downward shift in supply while the demand for U.S. manufactured supplements are high.
5. Policy Scenario II (12 points) (300 words approx)
Some evidence suggests that firefighters may experience significantly higher lifetime risks of certain cancers. This may be because they are frequently exposed to carcinogens in the form of smoke from burning materials, particularly those containing plastics or other manmade materials (externality). Workmen’s Compensation insurance claims to cover job-related disability of this sort are often denied because individual cases cannot be definitively tied to on-the-job conditions. Young people training for and entering the trade are generally unaware of this potential hazard (information asymmetry) .
Describe at least 3 market failures underlying in the problems described above (information asymmetry, externalities etc.), and describe policy approaches that might be appropriately applied to solve each market failure you identify.
To include in answer:
-Fire fighters experience the ‘negative externality’ of being exposed to carcinogenic smoke which has long term effects.
-Compensation insurance claims resemble the issue of ‘Public goods’.
-Young people unaware of potential hazards are known as ‘Information Asymmetry’.
