10.4 entrepreneurship

Question 1

byproducts

Answer 1

Firm’s have incentives to eliminate byproducts:
1. Byproducts require disposal which the firm will have to pay for. Eliminating the disposal cost is a benefit for the firm.

2. Byproducts that are dangerous are a liability for the firm. Eliminating liability is a benefit to the firm.
3. Turning byproducts into something sellable, take a cost and turns it into a benefit. Not selling the byproduct is an opportunity cost.

Question 2

does this mean we should recycle everything?

Answer 2

Recycling can reduce garbage but you still need to do a cost-benefit analysis.

Recycling some products is clearly worth it for
a firm.

Recycling other products might be worth it
from a social perspective.

There are some products where recycling is
not worth it when all the costs are considered.

Question 3

Does the higher landfill prices mean we are running out of space for our garbage?

Answer 3

no!!!!

The story of the Mobro 4000 having no place to dispose of its garbage caused people to think that there was no room left for trash in the US

Question 4

efo-efficiency

Answer 4

Making better use of inputs leads to more profitable outcome for firms and better environmental outcomes

Question 5

principles to consider

Answer 5

• Entrepreneurs find situations with problems and look for the low-cost ways to fix them.
• Bargaining can be better than the courts.
• Local action is more likely to succeed.
• Parties share goal of protecting resource.
• Legal recognition of environmental use exists.
• Parties trust each other.
• Long-standing resources are not placed at risk due to trade.
• Mechanisms for buyers and seller to find each other

Question 6

big takeaway

Answer 6

The incentives to innovate and make bargains with each other can lead us to more efficient outcomes and this all happens automatically as part of a market economy