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Econ 428 Question Paper

Econ 428

Course:Bachelor Of Science In Economics And Mathematics

Institution: Kabarak University question papers

Exam Year:2010

COURSE CODE: ECON 428
COURSE TITLE: ENVIRONMENTAL ECONOMICS
STREAM: Y4S2

INSTRUCTIONS:
Answer question ONE (compulsory) and any other TWO questions.

1. Distinguish the following paired terms as used in environmental economics:
(a) Actual value and existence value. (4 marks)
(b) Biosphere and hydrosphere. (4 marks)
(c) Resource function and amenity function. (4 marks)
(d) Social cost and private cost. (4 marks)
(e) Recyclable resource and non-recyclable resource. (4 marks)
2. A firm engaged in the mining of gold is faced with the following demand and supply
functions:
Pd = 2200 – 0.0015Q and PS = 1200 + 0.0025Q
The pollution costs per unit resulting from its production is C = 0.001Q.
Where p is in kshs and Q is in grams.
(a) By use of a graph distinguish the social optimum allocation from the market equilibrium.
(4 marks)
(b) Using algebra, solve for the output and price at market equilibrium. (3 marks)
(c) Solve for the output and price at social optimum allocation. (7 marks)
(d) What amount of tax rate will be necessary to enable an achievement of the social
optimum? (2 marks)
(e) Discuss three ways in which the government can intervene in the market to control
Pollution (9 marks)
3. (a) Discuss ways in which Kenya can ensure sustainable development. (20 marks)
(b) Using Kuznets inverted U-curve, explain the relationship between economic growth
and environmental quality. (5 marks)
4. A firm engaged in coconut farming is faced with the following demand and supply
functions for coconuts
Pd = 8000 – 0.05Q and PS = 3000 +0.15Q

The benefit per unit resulting from its production is B = 0.05Q
(a) By use of a graph distinguish the social optimum allocation from the market equilibrium.
(4 marks)
(b) Solve for the output and price at social optimum allocation and compare with the
market equilibrium. (10 marks)
(c) What amount of subsidy will be necessary to enable an achievement of the social optimum?
(3 marks)
(d) Discuss how the use of marketable pollution permits for carbon can benefit Kenyan farmers.
(8 marks)
5. Discuss the following ways of environmental valuation giving their advantages and
disadvantages.
(a) Contingency valuation method (10 marks)
(b) Cost-benefit analysis (15 marks)

Econ 428 Question Paper

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