Section A

1) With a suitable illustration, show that when externalities are present, the price-taking profit maximising behaviour of a producer will not necessarily lead to an efficient allocation of resources. Also, suggest remedies in such situation.

2) In case of forestry, outline how the optimal harvesting age is determined? Discuss how in this situation, Hartman’s model yields higher rotation age than that of Faustmann’s.

Section B

3) Bring out the crux of the concept of ‘sustainable development’.

4) Explain briefly any three situations under which government intervention is necessary in public interest.

5) Briefly outline the current ‘system of national accounts’ pointing out its shortcomings from the point of view of environmentally sustainable national accounts.

6) Discuss briefly the limitations of the ‘game theoretic approach’ to ‘common property resource management’.

7) Present a critique of the approach to studies of ‘cost-benefit analysis’.