econ test 1 Flashcards
1
Q
dynamic efficient management of a fishery is complicated by
A
mobility of the fish
2
Q
for dynamic efficient management, recognizing non market values typically means
A
more conservation
3
Q
there is less incentive for a harvester of fish to conserve because
A
there is no guarantee that any conserved fish will be available for harvest in the future
4
Q
for dynamic efficient management of a natural resource, an increase in the interest rate should
A
reduce conservation
5
Q
the existence of non market values for a renewable resource
A
implies overuse of the resouce
6
Q
when the growth in value of a renewable resource is less than the rate of interest, then the economic decision that maximizes the NPV is
A
harvest
7
Q
all other things equal, an increase in the cost of replanting trees
A
increases the optimal rotation time
8
Q
the economically efficient harvest in a forest
A
maximizes the NPV of the forest
9
Q
site value is
A
the value of the land in its best use
10
Q
an alternative technology should eventually cause the MUC of a non-renewable resource to
A
remain constant
11
Q
when the growth in value exceeds the rate of interest
A
NVP increases by postponing use
12
Q
sustainable use of a non-renewable resource is
A
literally not possible
13
Q
a renewable resource is one in which
A
a population or stock may naturally increase
14
Q
the four categories of market failures are
A
externalities, market power, public goods, and imperfect formation
15
Q
when there is a negative externality associated with the production of a good or service then the market will typically produce
A
too much of a good or service
16
Q
an externality is an example of
A
so incomplete market
17
Q
a public good is an example of
A
an incomplete market
18
Q
the tragedy of the common is characterized by a
A
non-excludability and negative externalities by users
19
Q
marginal user cost is
A
the PV of the cost of the unavailability of that amount in the future
20
Q
the net present value of a natural resource is maximized when its use
A
gv=r
21
Q
a public good has the characteristics of
A
non excludability and non rivalry use
22
Q
scarcity rent refers of
A
the marginal user cost
23
Q
efficient free market equilibrium
A
maximize the sum of consumer and producer surplus
24
Q
a competitive market is one in which
A
there is no market power- all market participants take the market price as given
25
a cognizant market is one in which
all relevant information is available
26
a complete market is one in wich
all relevant costs and benefits are borne by participants
27
pareto efficiency occurs when
there are no possible Pareto improvements
28
the economically efficient level of pollution is always
>= 0
29
cost refers to
whar is given up
30
the law of diminishing returns means that
MB and MC will eventually intersect
31
net benefits are
maximized when marginal benefit equals marginal cost
32
dynamic efficiency refers to
applying the rules of economic efficiency over time
33
characteristics of fisheries
mobility - they move
lack of jurisdictions - difficulty in forming census
lack of property rights.- hard to enforce boundaries
34
gv> r
npv increases if conserves
35
gv< r
decrease npv - should have been used
36
issues with dynamic management of species
cant manage access to harvesting and the quality of the ecosystem
37
methods of managing harvesting
establish property rights
raise the cost of harvest - tax what they've caught
regulate technology used - boat, nets etc.
38
forests are relatively immobile
makes assessments of size easy to tell of growing or shrinking
39
the decisions to harvest requires a subsequent decision to
replant or not
40
faustmann's rotation
when land can be planted an unlimited number of times
-interested in the value of the land
gv=r
41
steady-state model
the fish population remains the same from period to period, thus the fishing harvest is equal to net growth of the stock
42
Forests are relatively slow growing
planning and harvesting times require patience
43
forests have multiple conflicting uses
output of wood, habitat, ecological, recreation and agriculture
44
Wicksell rotation
refers to the age at which a stand of even-aged tress will be harvested at one time one (one harvest)
- interested in the volume of timber
45
gv= r
nvp is maximized
46
gv> r
post pone use
47
gv
waited to long to harvest
48
sustainable use for a renewable resource
cant run out or exhaust
49
sustainable use for a nonrenewable resource
it can run out and exhaust
50
weak sustainability
the use of a natural resource or a waste processing service faster than it is generated by the environment can be sustainable if these losses are offset by an increase in either economic capital or social institutions
51
strong sustainability
the value of the remaining stock of natural capital should not decrease
52
environmental sustainability
developing strategies and practices that create a world economy that the planet can support indefinitely
53
usage of natural resources is affected by
interest rate, demand, recycling, alternative technologies
54
property rights
the ability of an individual to own and exercise control over scarce resources
55
property rights a part of a
complete market
56
exhaustible resources have
no externalities of any type
57
user of some exhaustible resources generates some
negative externalities
58
renewable resources
maximization of NPV of any captial asset
59
GV > R
not using allows NPV grow
60
growth of non market value 1
it is hard to measure
61
growth of nonmarket value 2
usually not captured by the users
62
growth of nonmarket value of 3
easily ignored
63
history of owner ship
exhaustible resources are owned
64
are renewable resources owned
spotty history with ownership but they are used
65
mobility (exhaustible resources)
immobile
66
exhaustible resources are
non renewable resources
67
mobility
renewable resources can be mobile or immobile
68
nonrenewable resources tend to have positive
non market existence value
69
renewable resources can grow in value from
growth in population, size of units, and health of the population
70
the hotelling rules state that
the optimal extraction rate of nonrenewable resources maintains an asset market equilibrium in which the rate of return to stocks in the ground equals the rate of return to alternative investments
71
marginal user cost
the opportunity cost of future consumption that is foregone when on more unit of a resource is extracted in the current period
72
basic model 1
demand is constant
73
basic model 2
no alternative technology
74
basic model 3
known or fixed amount
75
basic model 4
MEC is constant
76
marginal efficiency or capital
the rate of return of the extra profit earned from the last unit of capital employed
77
marginal user cost grows by ____ each period
r
78
if one can achieve a goal through various costly activities, the cost is ___ when MC is ___ per activity
minimized, equal
79
if R increases
future use is less valued than the current use
80
new alternative technology
higher prices provides incentives for searching for new deposits (new way to produce)
81
simple model 1
demand is constant
82
simple model 2
no alternative technology
83
simple model 3
reserves are fixed/know
84
simple model 4
MEC is fixed
85
simple model 5
R is constant
86
rate of growth will be _ when recycling and the _ will decline slowly
slowed and use
87
net present value
the present value of current and future benefits minus the present value of current and future costs
88
positive externality
a benefit received by someone who had nothing to do with the activity that generated the benefit
89
private goods
goods provided by private businesses that can be used only by those who pay for them
90
public goods
goods such as clean air and clean water that everyone must share
91
the tragedy of the commons
the notion that any resource that's open to everyone, like air, or part of the ocean, will eventually be destroyed because everyone can use it but no one is held responsible for preserving it
92
marginal user cost
extra cost of using a non renewable resource that could have been used in the future
93
time value of money
idea that future money has less value then available capital
94
static efficiency
making the most of your resources at a given time
95
dynamic efficiency
markets' ability to promote cost-reducing or product-enhancing technological change
- facebook was popular but then instagram came so facebook has to keep updating its production/ technology and lowering the cost to keep consumers
96
law of diminishing returns
states that successive increases in inputs eventually lead to less additional output
-if it takes 5 hours to do hw and i only get 10 points, it will marginal decline
97
marginal benefit
the additional benefit consumer from consuming one more unit of a good or service
98
economic efficiency
optimal production and distribution of scare resources
99
net benefit
the difference between the marginal benefit and the marginal cost of an option
100
pareto improvement
an action that makes at least one person better off, and harms no one
101
pareto optimality
a distribution of things such that no one can be made better off without someone becoming worse off
102
what makes a market economically efficient?
when it is complete, cognizant and competetive
103
complete market
where all benefits and all costs associated w the market activity only applies to the market participant
104
competitive market
a market in which there are many buyers and sellers of the same good and service, none of whom can influence the price at which the good and service is sold
105
cognizant market
all markets have access to all relevant information for products
106
demand curve
shows the amount consumers are willing and able to purchase at various prices
107
supply curve
the amount of producers are willing and able to sell at various prices
108
demand curve slopes
up
109
market equilibrium
a situation in which quantity demanded equals quantity supplied
110
the economically efficient level of pollution is always
greater than and equal to 0
111
all market based information for environment work by
forcing the relevant parties to internalize the external costs
112
market-based approaches to negative externalities
reduce deadweight loss
113
coase therom
shows that participants may reach an economically efficient outcome in limited circumstances
114
a potential barrier to achieving the efficient level of an externality through voluntary incentives is
-a large number of participants
- realizations on the part of generators and victims that they are participants
115
placing a fee or tax on a negative externality
-provides an incentive to innovate
-reduces the deadweight loss from the externality
- provides for the potential for a double dividend
116
creation of efficient property right structures
may achieving the efficient outcome under limited circumstances
117
a tax on emissions of 5 is instituted to achieve a target of emissions Et we know
MAC = 5 for all emitters
118
A tax on emissions of 5 is instituted to achieve a target level of emissions Et. We know
MDF= 5
119
major sources of inefficiency in the management/ use of species and fisheries are
1. species are usually common property resources, so that there is no economic incentive
2. inefficient property rights in those cases where species are not common property
3. externalitys
4. poorly designed public policy that may inefficiently raise the cost of harvest
120
how to alleviate those inefficiencies in fisheries
1. properly designed harvesting taxes
2. transferable harvesting rights/quotas
3. establishment of private marine reserves and
4. establishment of 200-mile fishing limits
