Upgrade to remove ads
Only $35.99/year

NR 104 exam #2

Terms in this set (32)

Intergenerational Equity
concept or idea of fairness or justice in relationships between children, adults and seniors

- central desirable end of economic activity is high quality of life for this and future generations
OWN DEFFINITION
Public Trust Doctrine and what resources are protected
- the principle that certain resources are preserved for public use, and that the government is required to maintain them for the public's reasonable use
- all encomasing definition of natural resources
differences between ecological economics and traditional economists
neoclassical economics does not account for finite resources, believes that the economy can grow continuously without negative effects

Traditional - Natural resources are infinite and a subcomponent of the economy

Ecological- Natural resources are finite and the economy is a subcomponent of the environment

KNOW THE CIRCLES
issue with infinite economic growth models
does not account for through put (finite inputs and waste)
- the economic system is sustained and contained by the finite planetary ecosystem, so continuous exponential growth of physical economic production is impossible
3 requirements that a system must satisfy to sustain high quality of life across generations
1. An ecologically sustainable scale
- confined by planetary ecosystem
- a sustainable economy- cant use faster then can produce or absorb.
- restore/ maintain ecological resilience
2. Just distribution
- people who struggle to feed themselves today will worry less about a sustainable future.
- justice is necessary for sustainability
3. Efficient allocation - finite resources and unmet human needs.
- ecosystems provide goods and services needed for quality of life.
- allocate resources towards products that most enhance quality of life.
4 major forms of capital
Natural Capital - (formerly land) included ecological systems, mineral deposites, other aspects of the natural world
Human capital - (labor) includes the physical labor and the know-how stored in our brains.
Manufactured/ build capital - all the machines and other physical infastructure in our economy
Social Capital- web of interpersonal connections and institutional arrangements.

traditional: focus on Built and Human Capital
Ecological economics adds in Social and Natural Capital

KNOW ONE OR TWO EXAMPLES FOR EACH
4 types of market goods
Private Market goods - (rival and excludable) food, clothes, computer, coffee, copper, lumber

Common goods ( rival and non-excludable) ocean fisheries, common grazing lands, bike path

Allied Goods ( Non- rival and excludable) Cable TV, Information, Patented materials

Public goods ( non-excludable and non-rival) air, old growth forests, biodiversity, street light

MEMORISE TABLE AND EXAMPLES
excludable vs. non-excludable
Excludable: ownership is possible, one person can prevent another's use
non- excludable : one person cannot prevent other's use
rival vs. non-rival
rival: use by one person precludes use by another person (fossil fuels)
non- rival : use by one person does not affect another, depletion does not occur through use. (air)
what types of goods are markets efficient at allocating
excludable (private and allied goods)
public goods/ common goods
common goods: shared access to a non-excludable/ rival good (commons)
- each user gains direct benefits & bears only fraction of the cost use
- little incentive to self- regulate
- tends towards overexploitation

Public Goods: ( non-excludable and non- rival) air, street light
Market failure
inefficient allocation of resources in a free market - when the outcome of the free market is different then the socially optimal outcome
3 major types of market failure
1. public goods & free riders
- once a public good is provided it is not possible to top people for benefiting - free rider problem ( certain individuals not contributing but still benefitting)
2. overexploitation of commons
3. externalities
externality
- the cost or benefit that affects a party who did not choose to incur that cost or benefit
- Transaction between A& B affects C but C is not accounted for in that transaction

windfarms negative externalities : Noise, visuals
Positive externalities: less use of fossil fuels.
2 ways of responding to market failure
Command and control regulations
Market based incentives
Recommended textbook explanations

Krugman's Economics for AP*

2nd EditionDavid Anderson, Margaret Ray
1,042 explanations

Principles of Economics

8th EditionN. Gregory Mankiw
814 explanations

Principles of Microeconomics

4th EditionN. Gregory Mankiw
393 explanations

Essentials of Investments

9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
689 explanations