ECN 345 Take Home Exam
V. Kerry Smith Total = 60 Points
Spring 2013

This final exam has two parts – take home problems and the exam at our scheduled time. The later will consist of multiple choice and short answer questions.

There are four problems. You should complete three. Do not attempt to complete parts of all four questions in the hopes of partial credit. You must select three of the four and do your best to complete all parts of each selected question. All four have the same points – 20 points each. Partial credit will only be given if you write clearly and label your work.

HONOR CODE:
I understand and agree to abide by Arizona State University’s HONOR CODE. I have worked completely on my own to develop answers for these questions:

_____________________________ _______________________________
PRINT Your Name Here SIGN Your Name Here

20 points
The Table attached provides an approximate version of the schedule from a spot auction for the permits to emit sulfur dioxide. You can assume this was undertaken before the court decision that effectively eliminated the SO2 trading market. You can also assume that the permits would be used before that decision came into effect. Each permit is good for one year and gives the owner the right to emit one ton of sulfur dioxide. Permits cannot be saved.
Approximate Version of Permit Auction Results
Bid Quantity Firm $500 5 Clean Air for People $400 100 ASU, Tempe Power Plant $300 5,000 APS Power $250 10,000 Progress Energy $225 5,000 Best Friends of the Air $200 4,000 TVA $150 1,000 Developing Innovative Research Techniques, Inc. $100 500 Virginia Power & Light Co. $75 3,000 Madison Gas & Electric $50 10,000 Somewhat Friendly toward the Air
*The environmental groups are: Clean Air for People, Best Friends of the Air (the Somewhat Friendly group is an industry group that doesn’t count as purely environmental).
(a) If the number of…