ECN 502 Chapter Notes - Chapter 2: Thermodynamics, Competitive Equilibrium, Inverse Demand Function
29 Sep 2016
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1st law of thermodynamics: energy and matter can neither be created nor destroyed. Positive economics attempts to describe what is, what was, or what will be. Normative economics, by contrast, deals with what ought to be. September 14, 2016: address the question of how the bene ts and costs of environmental programs are distributed across society and whether the distribution is appropriate (maximum) willingness to pay. The chief normative criterion for choosing among various outcomes occurring at the same point in time. An allocation of resources is said to satisfy the static ef ciency criterion if the economic surplus derived form those resources is maximized by that allocation. Economic surplus is the sum of consumer"s surplus and producer"s surplus. Is the value that consumers receive from an allocation minus what is costs them to. It is the excess willingness to pay. Blue triangle (consumer surplus) is measured as the area under the demand curve minus the cost(p).
