RES-ECON 162- Final Exam Guide - Comprehensive Notes for the exam ( 60 pages long!)

• School: UMASS-Amherst
• Department: Resource Economics
• Course: RES-ECON 162
• Professor: Laurence De Geeste

Document Summary

Starts off lecture with greenhouse effect- in 1859, laboratory demonstration of the greenhouse effect occurred, yielding catastrophic consequences such as reduced agricultural yield, Rising sea levels, ocean acidification, and increased air pollution and prevalence of respitory illness. It is i(cid:373)porta(cid:374)t to (cid:374)ote that (cid:272)li(cid:373)ate (cid:272)ha(cid:374)ge is (cid:374)ot a te(cid:272)h pro(cid:271)le(cid:373) it (cid:272)a(cid:374)t (cid:271)e sol(cid:448)ed (cid:449)ith technology. Too much co2 in the atmosphere comes from people not taking into account the external costs of de(cid:272)isio(cid:374)s to (cid:272)o(cid:374)su(cid:373)e (cid:272)ar(cid:271)o(cid:374). Leads to (cid:271)ad i(cid:374)(cid:272)e(cid:374)ti(cid:448)es i. e the o(cid:448)er-consumption of carbon. Usually not accounted for by the people in an exchange. Benefit- getting from place a to b incentives- guide people to the right behavior bt delineating benefits and costs of decisions. Price of gas only reflects private cost, not social cost. Market failure- when a market for a good/service fails to account for external costs and benefits (externalities) and therefore sets the price wrong. Solution to this market failure is to price pollution!