Economics 3220 Chapter Notes - Chapter 1: Opportunity Cost, Demand Curve, Externality
Document Summary
Study of environmental problems using economic tools: scarcity, choice, opportunity cost, ppf, positive (objective), normative (subjective) statements, marginal benefits, marginal costs (demand curve, consumer, producer (economic or social) surplus, benefit cost analysis and non-market evaluation. Focus s how our economic activities affect our environment. No: the issue is to find the optimal level of impact. Is profit maximizing an incentive to pollute the environment: for firms, for individuals, government agencies. Recognize environment as an asset that we own. An asset has current and future values. Owner has incentive to maintain it so that future values are not drastically reduced. In natural resource economics, ownership of a resource is referred to pas property rights. 3 conditions: exclusivity: all benefits and costs accured to the owner, transferability: rights are transferrable, enforceability: rights cannot be encroached. If condition is number one, exclusivity is violated, then we have external effect or externality: some benefits and costs spill over to society.
