THE UNIVERSITY OF BAMENDA

Faculty of Economics and Management Sciences (FEMS)

CA Examination 2016/2017

Resource and Environmental Economics, Level 200

Examiner: Dr Saidou / Dr Ndamsa

Time Allowed: 2 hours

Instruction:

answer all questions

Question one (6 marks)

Some schools of thought think that resource economics and environment economics are separate entities and

b) National accounting arguably does not give an accurate indication of sustainable economic development.

Consumption and production activities have been shown to have impacts on the environment. Identify and explain

the adjustment's to be made with respect to the GNP figures in order to obtain an index of sustainable economic

development or welfare (ISEW). (5 marks)

Question Three (6 marks)

In a given economy, emissions arise from two firms (firm 1 and 2). The government wishes to reduce the total

emission of a pollutant from the current uncontrolled level of 100 units per period (i.e. Firm one currently emits 45

units and Firm two 55 units) to a target level of 70 units per period. Suppose that the total abatement cost functions

(C ) of the two firms are:

Where X

are the quantities of pollution abatement by firm 1 and 2 respectively

a) What is the pollution abatement target? (1 mark)

b) Determine the marginal abatement cost functions for the two firms. (2 marks)

c) Determine the least-cost solution. That is determine the levels of X

and X

which add up to the pollution

abatement target identified in (a) above. (3 marks).