APEC100 Lecture Notes - Lecture 5: Invisible Hand, Behavioral Economics, Excludability
Document Summary
Economics: science that examines relationship between resource supply and demand; study of allocating scarce resources to satisfy unlimited wants. Basic assumption: people make choices primarily motivated by self-interest. Economics studies people and society"s behavioral choices. Ecology: science that provides understanding of resource renewal rates. Policy: means by which societies organize guidance in balancing supply and demand based on ecological and economic information. No single best decision is available for all people. Rivalry means that what one person consumes cannot be consumed by others. Non-rival: one person"s consumption of public good does not diminish the amount of public good available to others to consume. Excludability means that some particular person has exclusive control over the good. Environmentalists are some of the loudest voices against capitalism and trade. The invisible hand doesn"t seem to promote a healthy environment. Property rights include rights to own, use, buy, and trade natural resources. Property rights are protected streams of benefits.