Lecture 2 and 3 Flashcards Preview

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Flashcards in Lecture 2 and 3 Deck (27)
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1
Q

what is economics concerned with?

A

allocating scarce resources among competing uses for the greatest benefit.

2
Q

the economy consists of what two sections? and the interactions between those 2 create what 2 markets?

A
  1. households
  2. Firms
  3. market for goods and services
  4. market for factors of production
3
Q

In the circular flow model what is not captured?

A

natural resource regeneration and the effect of waste and pollution.

4
Q

natural resource economics:

A

economics of resource use and extraction

5
Q

environmental economics:

A

economics of pollution

6
Q

the broader circular flow model, explain how it is diffrent then the other?

A

ecological system has its own circular flow, determined by physical and biological law rather than economic. Only has 1 net input (sun) and one net output (waste heat), everything else is contained in the ecosystem as waste or needs to be recycled.

7
Q

environmental source function:

A

ability to make services and raw material available for human use.

8
Q

how can the source function be degraded?

A
  1. resource depletion: extraction rate >regeneration rate

2. Pollution: contamination reduces its functon and capacity

9
Q

environment sink function:

A

ability to absorb and render harmless the waste by-products of human activity, function is overtaxed when waste volumes are too great in a given period or when too toxic

10
Q

traditional economics:

A

uses a set of models and techniques rooted within the standard neoclassical economic theory- applied to both non-renewabl and renewable resources

11
Q

Microeconomics:

A

considers individual decision makers within an economy (consumers, household, firms)

12
Q

environmental microeconomics:

A

the use of microeconomic techniques such as economic valuation, property right rules and discounting to determine an efficient allocation of natural resources and environmental services

13
Q

macroeconomics:

A

considers broader aggregates of economic activity such as uneployment, inflation and econmic growth

14
Q

environmental macroeconomics:

A

considers large scale environmental issues requiring a broader perspective ex.) global climate change or the ozone.

15
Q

opportunity cost:

A

the value of the next best alternative use that must be foregone in order to satisfy the chouuce. Not restructed to monetary or financial costs.

16
Q

Production possibility frontier:

A

maximum production level of one commodity for any given production level of the other commodity, given the existing state of technology.

17
Q

net benefit of preserving habitat=

A

benefits of avoiding species extinction - cost of lost lumber production (opportunity cost)

18
Q

efficiency:

A

an efficient allocation is one that maximizes the net benefits from resource use.

19
Q

what does a demand curve show?

A

shows the quantity demanded at each possible price, holding constant the other factor that influence purchases.

20
Q

law of demand:

A

the quantity of a good or service demanded by consumers will decrease as the price increases

21
Q

willingness to pay (WTP)

A

the maximum amount of money people are willing to pay for a good or service

22
Q

Total WTP for a given consumption level refers to what?

A

the total amount a person would be willing to pay to attain that consumption level. (the area under the curve)

23
Q

total benefits for a given level of consumption:

A

is the area underneath the demand curve to the left of that consumption level.

24
Q

change in the quantity demanded:

A

movement along a demand curve at different prices

25
Q

if there is change in demand what happens to the demand curve?

A

the entire demande curve shifts when other relevant factors are changing such as income,

26
Q

each indivdual consumer will have a slightly different demand function,why?

A

income, personal preferences and information

27
Q

the sum of individual demand functions within a society represents what?

A

the social demand function for the good or service.