Exam 2 Review
The exam will be closed book, but do bring a calculator. There will be lots of emphasis on DOING the various examples we've worked on in class. The exam focuses on material since the first exam: see both the original and revised course outline for specifics.
Here is my outline for the exam:
1. Climate footprint: work through a problem on how a change in behavior changes carbon emissions.
2. Why do environmental problems occur? Use the idea of externalities.
3. Discount a stream of future benefits.
4. Complete a simple benefit cost example.
5. Summarize the basic conclusion of the Stern Review of Climate, "mainstream" conclusions in the economics literature on addressing climate change, and Weitzman's critique of the Stern Review.
6. Outline Lomborg's basic argument and rhetorical approach (McKibben helps understand this) that we should not commit to costly policies to reduce climate impacts, at least at this time.
7. Illustrate the idea of increasing abatement costs on a graph.
8. What does the equimarginal principle mean? Illustrate on a graph.
9. What is the basic idea of an emission standard?
10. What is the basic idea of how pollution taxes work?
11. How does cap and trade work?
12. Which policy is not consistent with the equimarginal principle? Consequence?
13. Show behavior under each of these policies given a numerical example (i.e. given an abatement cost schedule for two firms.)
14. Show consequences: cost-effectiveness/efficiency and equity.
15. What do weak and strong sustainability mean? Implications for climate?
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