1) (6 points) Suppose a competitive market for agricultural production of soybeans has 100 identical firms, each with marginal cost given by MC(q_i) = 23+.01q_i, with MC in dollars per package of paper and q in thousands of packages. Which of the following functions describes inverse supply (P^S(Q)) for this market?

(circle only one response)

(E)   None of the above

2.

(6 points) Fill in the blanks in the following section from Weber and Chen (2012) by choosing the ordered list of words and/or phrases that complete the passage.

The preservation of natural forest capital through the NWFP ultimately has induced a —(i)— of the forest-related benefits of Federal forestland across communities. Historically, the major benefits came from the timber production which went mainly to the timber-dependent communities. The implementation of the NWFP, signaling that the federal government wanted to protect —(ii)— forestland, appears to have promoted community wealth in communities close to the protected land, and to have redistributed the economic benefits from the timber-dependent communities to a —(iii)— set of NWFP-adjacent communities.

(circle only one response- i.e. one row)

1. i: redistribution        ii: clear-cut       iii: smaller
2. i: redistribution        ii: old-growth  iii: broader
3. i: slow-down              ii: endangered iii: newer
4. i: regime shift            ii: ecosystem service   iii: smaller
5. i: jump-start ii: old-growth  iii: growing
6. i: reorganization       ii: scenic            iii: broader

3.

(6 points) Following the definitions from the Field (2016) textbook, if S_t is a renewable resource stock measured in a particular period t, then if ?S_t > Q_t ≥ 0 the stock is getting smaller from period t to period t +1.

St+1 = St − Qt +?St

(circle one answer)

4.

(6 points) In a two-period nonrenewable resource extraction problem with variable marginal cost of extraction MC(q_t) = a + bq_t (where a and b are positive parameters), reserve size X, discount rate r, and prices P₀ and P₁, where P₀ < P₁, it is possible that the stock constraint q₀ + q₁ ≤ X will not bind.

(circle one answer)

5.

(15 points) Consider a market structure where there is only one producer of steel. This firm acts as a profit-maximizing monopolist. Assume that the monopolist’s marginal cost curve is MC(Q) = 100+2Q, where Q is measured in thousands of pounds. Market inverse demand for steel is given by P^D(Q) = 250 − Q, where price is given in terms of dollars per pound of steel and Q. The monopolist’s marginal revenue is MR(Q) = 250−3Q, where again Q is in terms of thousands of pounds.

1. What is the equilibrium quantity of steel sold by the monopolist, and what is the price per pound?
2. Now suppose that the producer acts as a firm in a competitive industry.

What is the competitive equilibrium quantity and price?

6.

(15 Suppose that the growth rate of the sablefish (Anoplopoma fimbria) stock in the Central Gulf of Alaska fits a logistic function, with parameter values listed in Table 1 below.

Calculate the following potential equilibrium effort levels:

• The effort level (in fishing trips per year) that corresponds to maximum sustainable yield ( MSY ).

(HINT: Solve for stock X and yield Y, then use those to solve for effort E) - The economically efficient (sole-owner) level of effort.

• The open access effort level.

Depict your solutions on a graph that shows total revenue and total cost in this fishery (effort should be shown on the horizontal axis, and dollars should be shown on the vertical axis). The next page is left blank for extra room to work. 7 7.

(15 The owner of one acre of ponderosa pine (Pinus ponderosa) needs to plan a forest rotation length. Unless the owner chooses to sell the forest land, it will be kept in forestry and the chosen rotation will be maintained indefinitely. Assume that the stumpage price is p = $4.00 per cubic feet and the fixed cost of harvest is C = $3,800.00. The volume (in cubic feet) of the stand at any point in time is given by W(t) = at − bt² = 160t − 0.5t², where t is measured in years. Assume that the forest owner uses an annual discount rate of r = 0.01 and that the present value of bare land is S = $15,000 per acre.

1. Write down a condition the forest owner may use to choose a rotation length that maximizes the net present value of profits from timber harvest. In a few sentences, interpret the condition.
2. What is the forest owner’s efficient rotation length, rounded to the nearest year? Show your work, and plot your solution using a figure.