Section A: Population Growth

The populations of the worlds two largest countries, China and India, are both growin
2007
2012
China
1317
1350
India
1179
1263
Population, millions. Source: World Bank

The population growth rate, r, is a single number that describes this rate of growth. Be
We usually think about population growth as following an exponential path:

0 = 0
where: t represents time, usually measured in years, is the population in time t,
0 is the starting population size, and r is the population growth rate.

1. Sketch the exponential population growth formula on a graph, with time on the hor
Answer:
Considering, y=2^x
Time
Population
0
1
1
2
2
4
3
8
4
16
5
32

P0 highlighted in red represent the base year population that is initial population basis

2. Re-arrange the formula above to give a formula for r. (3 marks)

Answer:
Given,
Pt=P0ert
Therefore, ert= (Pt/P0)

We will take natuarl log both sides to derive formula of r

LN(ert)=LN(Pt/P0)
this gives,
rt=LN(Pt/P0)
Therefore, r= (LN(Pt/P0))/t

3. Using this formula, compute the average annual population growth rate for both co
Answer:
For China,
P0
1317
P5
1350
t
5
Therefore, r =
0.00495

4. Assuming these growth rates remain constant, estimate the 2020 populations of Ch
Answer:
For China
P0
1317
t
13
r
0.00495
Therefore, P2020 =
1405

Considering the growth rate remain constant for both China & India, the projected po
For China
t=
18
P2025 =
1440
General Formula for both countries in year t as below:
For China
Pt =
P0*e^(0.00495*t)

5. Using the formula you wrote down in question (4), in what year will the two count
Answer:
Considering the two equations we derived in question 4, we will equate the two equat
1317*e(0.00495*t) = 1179*e(0.01376*t)
1317/1179 = e(0.01376*t)/e(0.00495*t)

1.11705 = e(0.01376t-0.00495t)
Taking Natural Log both sides
LN(1.11705) = LN (e(0.00881t))

Therefore

0.11069= 0.00881t
t

12.6

years

6. Assuming that both countries average population growth rate doesnt change, how
How many years would it take for Indias population to double in size? What assump
Answer:
When population grows exponentially, the amount of time it takes for the population
Calculating Doubling Time
T = (ln 2/growth rate) x 100
T = doubling time
ln 2 = 0.693
growth rate is the percentage increase or decrease

Multiplying both sides by 100 gives

T = 69.3/growth rate
Therefore,
Growth rate of China will
double in

70/Growth rate, to simplify calculation

0.49000
143 years

7. If a countrys population follows an exponential curve indefinitely, is that populatio

Answer:
Exponential growth refers to a scenario when anything increases or decreases at a con
If a country's population increases at an exponential rate indefinitely, that means the p
This kind of scenario is not sustainable as exponential consumption of finite resource
It leads to problems such as unemployement, poverty, pollution etc
Once the economy overshoot the physical limits of the planet, there are only two way

na and India, are both growing rapidly. Consider the official populations estimates for China an

cribes this rate of growth. Below, we will derive a formula for this number, and then analyse th
n exponential path:

s the population in time t,

growth rate.

graph, with time on the horizontal axis and population on the vertical axis. Mark 0 and inter
Population

f(x) = exp( 0.6931471806 x )

P
0

hat is initial population basis which the growth rate is calculated

3 marks)

tion growth rate for both countries between 2007 and 2012. (2 marks)
For India
P0
P5
t
Therefore, r =

1179
1263
5
0.01376

the 2020 populations of China and India. What are their projected populations for 2025? Writ
For India
P0
t
r
Therefore, P2020 =

na & India, the projected population for 2025:

For India
t=
P2025 =

For India
Pt =

1179
13
0.01376
1410

18
1510

P0*e(0.01376t)

what year will the two countries population be equal? (3 marks)

we will equate the two equations to derive the year

th rate doesnt change, how many years would it take for Chinas population to double in size
ouble in size? What assumptions are you making in answering this question? (4 marks)

e it takes for the population to double in size is termed the doubling time.

y calculation

Growth Rate of India

will double in

1.376
51 Years

indefinitely, is that population sustainable? Explain your answer in detail. (5 marks)

creases or decreases at a constant rate or fixed percentage.

ndefinitely, that means the population is consuming natural resources (example food, water, oi
nsumption of finite resources is not sustainable.
lution etc
anet, there are only two ways back: economic collapse due to shortage and crisis or controlled

stimates for China and India in 2007 and 2012, below:

, and then analyse the growth rates of both countries.

s. Mark 0 and interpret this point. (2 marks)

tions for 2025? Write down a general formula for both countries population in year t. (6 mark

ion to double in size?

on? (4 marks)

(5 marks)

mple food, water, oil, gas) at an exponential rate too.

d crisis or controlled reduction of the ecological footprint.

population in year t. (6 marks)

Section B: Malthusian Disaster

In 1793 the political economist Thomas Malthus noticed that that population growth i
but that the level of food production had only increased by a fixed amount each year (

In An Essay on the Principle of Population, as It Affects the Future Improvement of S

[. . . ] the power of population is indefinitely greater than the power in the earth to pro
Population, when unchecked, increases in a geometrical ratio. Subsistence increases o
A slight acquaintance with numbers will shew the immensity of the first power in com
By that law of our nature which makes food necessary to the life of man, the effects o
This implies a strong and constantly operating check on population from the difficulty

1. Look at the graph of world population growth above. Does the growth in the popul
Answer:
The growth in the population looks geometric in nature as arithmetic growth will be m
The population growth here looks more like an exponential growth, hence geometric

2. Assume a population is initially a0 (when t=0) and that it grows by a ratio r every y
Answer:
Given
Population
Time
Growth rate

3. Malthus suggested that food supplies are growing at an arithmetic rate. Assume tha

Answer:
Food supply increasing at Arithmetic rate, initial b tonnes, increses by m tonnes every
b, (b+m), (b+2m), (b+3m) (b+tm)

4. Compare the expressions you found in questions (2) and (3). Let the initial populat
Answer:
Given below,
a0
1000

r
b
m

0.0105
1800
140
t
0
10
20
30
40
50

Population
1000
1111
1234
1370
1522
1690

Food Supply
1800
3200
4600
6000
7400
8800

5. Now, using the parameters in the previous question, suppose that each person consu
Answer:
Lets equate the two equations derived above of Population growth and food supply gr
1000*e(0.0105t)= 1800 +140t
or,
e(0.0105t)= 1.8 +0.14t
Mathematically, once we derive t, t+1 will be the year when population will begin to
Assuming the values for t, t= 384years
e(0.0105*384)=1.8+0.14*384 = 56

Hence the above equation equates whne t=384. So from 385th year the population wi

6. Find the year that the populations demand for food exceeds 16,000 tonnes per yea
Answer:
Assuming each person consumes one tonne of food per year, so when population exce
So,
Pt
16000
P0
1000
r
0.0105
therefore to calculate t
16000= 1000*exp(0.0105*t)
or, 16 = exp (0.0105t)

Taking natural log both sides

LN(16) = LN(exp(0.0105t))
2.77258872
2.773 = 0.0105t
therefore
t=
264.1 years
Therfore, at (t+1) that is 265 year the population's demand for food exceeds 16000 ton

7. Suppose that the population growth rate is slightly lower, and that r=1.01. Now find
Answer:
Given,
r
0.0101
Pt
16000
P0
1000
16000= 1000*exp(0.0101t)
Therefore
t= 2.773/r
that is, t=
274.6 years

Therefore, at 1.01% growth rate, the population demand for food exceeds 16000 tonn

8. Practically speaking, is it inevitable that, if food is growing arithmetically (m>0) an

Answer:
Arithmetically, food supply will always run out population growth as exponential inc
Practiccaly, fall in food supply will automatically reduce population growth due to ec
Increase in Population more than food supply will ultimately lead to increase in the fo
Population will eventually decrease by conscious human effort of controlling birth rat
In order to meet the growing population needs, economy will search of ways to increa
Population growth ultimately leads to surplus wealth, surplus capital and surplus land
Ultimately, food supply also increases along with population.

hus noticed that that population growth in the United States had been doubling every 25 years
increased by a fixed amount each year (which is arithmetic, or linear growth).

s It Affects the Future Improvement of Society, With Remarks on the Speculations of Mr Godw

greater than the power in the earth to produce subsistence for man.
eometrical ratio. Subsistence increases only in an arithmetical ratio.
w the immensity of the first power in comparison of the second.
necessary to the life of man, the effects of these two unequal powers must be kept equal.
g check on population from the difficulty of subsistence. This difficulty must fall somewhere;

wth above. Does the growth in the population look arithmetic (linear), or geometric? (1 mark)

c in nature as arithmetic growth will be more linear.

an exponential growth, hence geometric in nature

=0) and that it grows by a ratio r every year. Write down an expression for the population in y
a0
t
r

Population
year t)

(in

a0*ert

rowing at an arithmetic rate. Assume that the annual food supply is initially b tonnes per year,

tial b tonnes, increses by m tonnes every year. So for t year = (b+tm)

stions (2) and (3). Let the initial population a0 be 1,000, let the population growth ratio r be 1.
P0

1000*e(0.0105t)

Food supply

1800+(140*t)

People/tonnes
0.56
0.35
0.27
0.23
0.21
0.19

question, suppose that each person consumes one tonne of food per year. During which year w

of Population growth and food supply growth to determine in which year the population equat

the year when population will begin to experience food shortages.

4. So from 385th year the population will begin to experience food shortages.
for food exceeds 16,000 tonnes per year. (4 marks)

f food per year, so when population exceeds 16000, the demand for food will also exceed 160

ion's demand for food exceeds 16000 tonnes per year

slightly lower, and that r=1.01. Now find the year that the populations demand for food excee

on demand for food exceeds 16000 tonnes/year in 275 year

food is growing arithmetically (m>0) and population geometrically (r>1), that food supplies w

ut population growth as exponential increase in population in a certain time span will eventua
ally reduce population growth due to economic problems that will arise due to food shortfall.
will ultimately lead to increase in the food prices, thereby making standard of living fall.
ious human effort of controlling birth rate or involutary due to economic downturn and crisis.
s, economy will search of ways to increase supply either through technological advancement ,
wealth, surplus capital and surplus landed property.
with population.

en doubling every 25 years (which is geometric growth),

ear growth).

he Speculations of Mr Godwin, Mr Condorcet and Other Writers, he wrote:

rs must be kept equal.

culty must fall somewhere; and must necessarily be severely felt by a large portion of mankind

ar), or geometric? (1 mark)

sion for the population in year t. (2 marks)

s initially b tonnes per year, and that every year it increases by m tonnes. Write down an expre

pulation growth ratio r be 1.05, the initial annual food supply b be 1,800 tonnes, and the annua

People/tonnes

People/tonnes

r year. During which year will the population begin to experience food shortages? Derive you

ch year the population equates to the food supply

d shortages.

r food will also exceed 16000 tonnes per yer

ons demand for food exceeds 16,000 tonnes per year. (3 marks)

y (r>1), that food supplies will always run out? In reality, does it look like earth is heading tow

rtain time span will eventually outpace the arithemetic food supply growth.
arise due to food shortfall. Poverty, hunger, unemployment will involuntary reduce populatio
standard of living fall.
nomic downturn and crisis.
echnological advancement , adopting new farming methods and new seeds.

he wrote:

by a large portion of mankind.

onnes. Write down an expression for the food supply, in tonnes, in year t. (2 marks)

1,800 tonnes, and the annual increase m be 140. On the same set of axes, where time is the ho

food shortages? Derive your answer mathematically, rather than graphically. You may assume

ook like earth is heading towards a Malthusian Disaster? Provide some evidence from your ow

y growth.
nvoluntary reduce population.

ew seeds.

n year t. (2 marks)

of axes, where time is the horizontal axis and people/tonnes are the vertical axis, plot the valu

graphically. You may assume there is no food stored from year to year. (4 marks)

e some evidence from your own research to support your answer. (5 marks)

the vertical axis, plot the values for t=0,10,20,30,40 and 50 (4 marks)

o year. (4 marks)

(5 marks)

Section C: Solar Panels Investment

Suppose a family consumes 15kWh of power per day. Concerned about its carbon foo
Rational and economically minded, the family would like to find the cheapest way to
Assume the panels do not degrade over time, and at the end of 15 years, the solar pan
Also assume that electricity provided by the solar panels has a per unit cost of zero (i.

System Type

Electricity Generated /
day

1 kW system
1.5 kW system
2 kW system
3 kW system
4 kW system

3.9 kWh
5.85 kWh
7.8 kWh
11.7 kWh
15.6 kWh

To make this investment, the family would withdraw from its cash management trust,
The remainder of the familys power is provided by the electrical grid. They face the
Item
First 1000 kWh
>1000 kWh
Supply charge

Units
$ per kWh
$ per kWh
$ per day

You may assume that electricity prices remain constant, and inflation can be ignored.
Given:
total power consumption in a day
15
Renewable
7.5
Non-renewable
7.5
Time, t
15
residual value
0
Variable cost
0
Discount rate, i
6.50%

1. Which is the cheapest solar system type that would provide 50% of the family elec
Answer:

The cheapest solar system type would be 2 kW system as it generates 50% that is 7.5
Total consumption
15 kWh/day
50% consumption
7.5
2kW system generates 7.8kWh/day, meeting the family requirement.
Hnece 2kWh system would be cheapest considering the family requirement

2. Assuming that the solar system performs as advertised, what is the familys quarter
Answer:
Considering family do not install solar panel and use 100% non-renewable energy, th
Electricity consumption for 91 days
1365
Therefore, electricity bill for first 1000 kW
For >1000 kW
Supply charge
Total electricity cost

$268.40
$102.38
$62.86
$433.65

When family installs solar panel, the total cost will reduce by almost half as 50% of e
Hence electricity bill after solar panel installation
Electricity consumption for 91 days through electri
682.5
For bill for first 1000 kW
$183.18
Supply charge
$62.86
Total electricity cost
$246.05

3.Using an annual discount rate of 6.5% and ignoring inflation, what is the present va
Answer:
i
For one year, electricity consumption
(considering 365 days in
(considering 366 days in
Electricity bill per year

(365days)
(366 days, leap year)

**For accuracy of the data, we will consider every forth year as leap year hence 366 d
Considering the family has installed solar panels, their electricity demand from electr
Here, we will also consider the cost of installing solar panel of $8000 -as due to instal
PV= CFn/(1+i)^n

Time period

0
$8,000.00

Installation cost
Electricity Bill after installation of solar panel
PV of the electricity bill each year

$8,000.00
$17,480.95

PV of the electricity bill

4. Other than buying solar panels, what is the quarterly cost of the next best alternativ
Answer:
Other than buying solar panels, the next best alternative is to use electric grid which s
Quarterly electricity consumption
1365
For first 1000kWh
$283.80
>1000 kWh
$108.00
Plus, supply charge
$62.86
Therefore, quarterly cost
$454.67

5. What is the present value of 30 years worth of this solution? Again, ignore inflatio
Answer:
PV of electricity bill after installation of solar panel for 30 years
Reinstallation of solar panel will be required at the end of 15th year as the life of the p
So to calculate PV of the electricity bill of 30 years, we will add the cost of installig s
discount rate, i
6.50%
Electricity bill remains constant every year, considering no inflation, no variable cost
Time period

Installation cost
Electricity Bill every year

8000

Calculating PV of the electricity bill each year

PV of the electricity bill of 30 years

8000
24,278.68

6. Conditional on using at least 50% renewable energy, what is the net present value (
Answer:
After installing solar panel of 2kW generating 7.8 kWh/day, the NPV for the time per
i
6.50%
n
15
NPV
$9,480.95
Installation cost
8000
therefore NPV of using solar panel
$17,480.95

IF not installing solar panel, then NPV of using 50% renewable source through electr
365 days
Total electricity consumption in an year
5475
Cost of first 1000
$283.80
for >1000
$1,324.15
Supply charge
$252.14
Total electricity bill for an year
$1,860
Time period
Electricity bill if using electric grid with 50%
renewable enerygy
NPV of using 50% renewable energy from
grid

IF not installing solar panel, then NPV of using 100% renewable source through
365 days
Total electricity consumption in an year
5475
Cost of first 1000
$299.20
for >1000
$1,393.07
Supply charge
$252.14
Total electricity bill for an year
$1,944
Time Period
Electricity bill if using electric grid with 100%
renewable enerygy
NPV of using 100% renewable energy from
grid

7. Interpret your result from question (6). Is buying solar panels a good idea? Explain
Answer:
As calculated above, NPV of electricity bill generated using solar panel system is the
Hence, buying solar panel 2kW system generating 7.8 kWh/day will be a good idea fo

8. Under the same assumptions as above, assume the family is not committed to purch
Answer:
Given, i=
6.50%
365 days
Total electricity consumption in an year
5475
Cost of first 1000
$268.40
for >1000
$1,255.24
Supply charge
$252.14
Total electricity bill for an year
$1,776

Elecricity Bill every year, Cash Outflow

NPV of using non renewable energy from grid

1
$1,776

$16,705

9. Will the family in question (8) purchase the solar panel system named in question (
Answer:
As calculated above, NPV of using non-renewable energy from electric grid comes ou
Hence family may not consider buying solar panel of 2kW system.
But, considering family is concerned about environmental issues and would like to ke
As installing solar panel will reduce electric consumption from the grid which in turn

10. Some governments have offered subsidies to consumers to install solar panels in t
Answer:
Government offers subsidies to consumers to install solar panels in their homes becau
Giving subsidies to household will promote them to install solar panel which will red
Giving subsidies ensure energy bills for hardworking families and businesses are kept

bout its carbon footprint, the family would like to ensure 50% of its electricity comes from ren
he cheapest way to do so, and its planning horizon is the next 15 years.
years, the solar panels will have zero residual value.
unit cost of zero (i.e. zero variable cost).

Installation Cost
$6,000
$7,000
$8,000
$11,000
$14,000

management trust, which is expected to return a steady 6.5% per year, compounded annually,
rid. They face the following prices for energy they purchase:
Non- Renewable
50% renewable
100% renewable
$0.2684
$0.2838
$0.2992
$0.2805
$0.2959
$0.3113
$0.6908
$0.6908
$0.6908

on can be ignored. Assume the power generated by the solar panels is the same year-round.

of the family electricity consumption? (1 mark)

ates 50% that is 7.5kwh of the family electricity consumption

kWh/day

uirement

he familys quarterly bill from its energy provider? Assume there are 91 days in a quarter. (2 m

newable energy, the electricity bill would be

kW per quarter

st half as 50% of electricity demand is met through solar panel

kW per quarter

at is the present value of 15 years worth of electricity bills? (2 marks)

6.50%
5475
5490
2738
2745

$1,008
$1,010

(Cost+supply charges)
(Cost+supply charges)

ap year hence 366 days.

emand from electric grid reduced by half for each year till 15 years; assuming no inflation and
00 -as due to installation the electricity bill reduced, hence will be to calculate present value o

$1,008
946
9481

$1,008
889

$1,008
834

next best alternative, which still provides 50% renewable energy? (3 marks)

ectric grid which still provide 50% renewable energy

ain, ignore inflation, and use a discount rate of 6.5%. (3 marks)

r as the life of the panel is for 15 years only and residual value is zero
e cost of installig solar panel first at the beginning of 1st year then at the end of 15 th year

n, no variable cost as mentioned

1

16279

$1,008

$1,008

$1,008

946

889

834

net present value (NPV) of purchasing the solar panel system named in question (1)? Hint: to

PV for the time period of solar panel 15 years is as below:

urce through electric grid

366 days
5490
$283.80
$1,328.59
$252.83
$1,865.22
1

2
$1,860

3
$1,860

$1,860

$17,499.35

le source through electric grid

366 days
5490
$299.20
$1,397.74
$252.83
$1,950
1

2
$1,944

$18,292.56

3
$1,944

$1,944

good idea? Explain your answer. (2 marks)

panel system is the least compared to 50% or 100% renewable energy used from the electric gr
ll be a good idea for the family.

committed to purchasing renewable energy (i.e. the family is happy with consuming non-renew

366 days
5490
$268.40
$1,259.45
$252.14
$1,780
2
$1,776

3
$1,776

4
$1,780

amed in question (1)? (2 marks)

ctric grid comes out to be the lowest.

nd would like to keep a check on their carbon footprint, then they should still purchase solar p
grid which in turn will also reduce carbon footprint by 50%.

all solar panels in their homes. Why? (3 marks)

their homes because, government swiftly wants to move towards low-carbon energy future.
nel which will reduce overall energy bills.
businesses are kept as low as possible whilst ensuring there is a sensible level of support for lo

s electricity comes from renewable sources.

ar, compounded annually, for the foreseeable future.

is the same year-round.

e 91 days in a quarter. (2 marks)

((1000*0.2684)+(>1000*0.2805)+(365*0.6908))
((1000*0.2684)+(>1000*0.2805)+(366*0.6908))

; assuming no inflation and zero variable cost.

o calculate present value of the electricity bill.

$1,010
785

$1,008
736

$1,008
691

$1,008
649

$1,010
610

$1,010

$1,008

$1,008

$1,008

$1,010

785

736

691

649

610

3 marks)

at the end of 15 th year

d in question (1)? Hint: to answer this question you will need to consider the present value of

$1,865

$1,860

$1,860

$1,860

$1,865

$1,950

$1,944

$1,944

$1,944

$1,950

gy used from the electric grid.

with consuming non-renewable energy from the grid.) What is the NPV of purchasing solar p

5
$1,776

6
$1,776

7
$1,776

8
$1,780

9
$1,776

hould still purchase solar panel system.

ow-carbon energy future.

sible level of support for low carbon technologies that represent value for money

10

11

12

13

$1,008
572

$1,008
537

$1,008
504

$1,010
474

$1,008
445

10

11

$1,008

$1,008

$1,008

$1,010

$1,008

572

537

504

474

445

12

13

r the present value of renewable energy sources and the present value residual electricity bills

10

11

$1,860

$1,860

$1,860

10

11

$1,944

$1,944

$1,944

12
$1,865

12
$1,950

13
$1,860

13
$1,944

of purchasing solar panels now? (3 marks)

10
$1,776

11
$1,776

12
$1,780

13
$1,776

14
$1,776

14

15

$1,008
417

$1,008
392

14

16

17

18

$1,008

15
$8,000.00
$1,008

$1,010

$1,008

$1,008

417

3503

369

346

324

e residual electricity bills along with any associated installation costs. (4 marks)

14

15

$1,860

14
$1,944

$1,860

15
$1,944

15
$1,776

19

20

21

22

23

24

$1,008

$1,010

$1,008

$1,008

$1,008

$1,010

305

287

269

252

237

223

4 marks)

25

26

27

28

29

30

$1,008

$1,008

$1,008

$1,010

$1,008

$1,008

209

196

184

173

162

152