Unit Three Test

27 04 2011

For this test you will be required to choose 2 of the 4 problems.  There will be statements to correct on the test as well.

Econoville is a fast-growing town, struggling with many problems.  Richard Wilkins, the mayor, has hired you for your economic expertise.  Choose two of the four situations and provide recommendations on what the mayor should do. For each situation, thoroughly describe the economic principles involved in creating the problem and then offer solutions.  Consider the pros and cons of your solution and make a clear recommendation.  For the purposes of the test, you can assume the mayor has significant power.  (i.e. don’t worry too much about the politics, focus on the economics).

  1.  The town has a small public park that is sometimes empty and sometimes too busy for everyone to use (eg Frisbee players are trampling through picnics, etc).  People are complaining that they can’t enjoy the park because it is too crowded.
  2. A new electricity generating station opened to meet increased demand from the town.  Residents near the plant are complaining about increased air pollution and asthma cases in the neighbouring communities are increasing.
  3. Rent prices are increasing in town and some residents are paying over 60% of their income in rent.  Some residents can no longer afford housing of any type.
  4. The town budget is limited and the mayor needs to find new sources of revenue. The town currently has no taxes in place.  The mayor would like your opinion on what type of tax or taxes would raise the most money without unduly burdening town residents.
Marking Scheme

Criteria

Insufficient Evidence

Limited Evidence

Some Evidence

Considerable Evidence

High Degree of Evidence

1) Does the answer demonstrate an understanding of the underlying economic concepts? (KU)

0

1

2

3

4

2) Does the answer use appropriate models, graphs and examples to support arguments? (AP)

0

1

2

3

4

3) Is the answer well-reasoned? Does it consider multiple perspectives and all available evidence? (TI)

0

1

2

3

4

4) Does the answer come to a clear, easy to understand conclusion, supported by reasoned arguments? (CM)

0

1

2

3

4

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